One of the toughest things about being an elected official is dealing with taxes.
The conventional wisdom is that voting for a tax increase, regardless of the nature of the tax or of the justification for it, is an exercise in political self-destruction. One may survive (and frankly, most do), but a “yes” vote on taxes seems always to be perceived to be a bad thing.
Except, of course, that it is not. Taxes (and fees) are the source of the recurring revenue of a government. If anything that the government does is considered to be valuable, the government must collect enough revenue to sustain those valuable things. If the costs of those things increase, taxes and fees must increase as well.
And if the public wishes the government to add some activity to its portfolio of services, those costs also must be covered by increases in taxes and fees.
A strengthening economy, a mildly tightening labor market and a slight increase in interest rates are all likely to increase the costs of doing business, for private citizens and for public entities. Economists actually argue that we want a little inflation (the target rate of the Fed is about 2% per year) for economic health. By definition, that means costs will increase, and with them, the revenue needs of governments.
There’s good news to soften the blow for those who must vote for “tax increases” or simply to hold the line and let growth pay for itself (if it will). That good news is that the combined state and local tax burden born by Floridians has declined somewhat, and that, in relative terms, our tax burden is less than that in many other states.
Florida Taxwatch’s calculation of tax burden focuses on all the ways we pay for government (not just things formally called “taxes”) and on the cost as a percentage of personal income. This means that Florida Taxwatch’s estimate of the overall burden is higher than some other calculations. It also means that a decrease in burden (measured as a percentage of personal income) can arise even when the total revenue collected increases. If personal income increases at a faster rate than taxes, the relative burden actually declines.
While one can argue with aspects of Florida Taxwatch’s calculations (as with any such estimates), it’s a good benchmark, especially when viewed over time. And by their benchmark, while state and local governments in Florida will have collected roughly $3.6 billion more this fiscal year than last, that actually amounts to a 0.2% decrease in tax burden as a percentage of personal income, down from 13.2% to 13% (or 13 cents on the dollar).
So what does that mean in practical terms for the average Floridian? A decrease of 0.2 cents on the dollar might be translated this way: if someone made $50,000 last year and $50,000 this year, theoretically they are paying $100 less to support state and local government this year than last (roughly $6,500 as opposed to $6,600).
Of course, that reduction doesn’t show up anywhere on a bill. It appears in tiny increments, a little off this bill, a little off that one. $8.33 a month. Nothing much.
Still, smaller is smaller. If we are getting what we want for what we are paying, that’s all good news.
The other important point is clear when we put our state and local tax burden in national perspective. Florida consistently ranks somewhere among the 25 states with the lowest state-local tax burden (again, as a percentage of personal income). From the standpoint of our business tax climate, the Tax Foundation rated Florida the 4th best state in the nation for business. (It’s also worth noting that Florida is the only state with a large and largely urban/suburban population in the top five.)
So what we have here is a relatively modest and modestly declining tax burden on the average Floridian. Full stop.
The lingering questions: Are we getting what we are paying for? Are we getting what we need? Are we getting what we want?
A friend from my college days proudly wore a button with the numbing acronym TANSTAAFL – There Ain’t No Such Thing As A Free Lunch.
But the truth is that Floridians are getting a mighty good blue plate special from their local and state governments . . . provided they like what we’re serving.