Reality test about Nikki Fried’s assault on Ron DeSantis over taxes

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Democrat Nikki Fried said Florida has a history of Republican governors passing laws that harm people’s pockets.

Governor Ron DeSantis “recently signed a $ 1 billion tax increase for the people of our state, for our consumers, but gave our businesses a $ 500 million tax break,” Fried told WINK TV. “This is not how the government should work. The government should work for the people.”

Fried’s testimony criticizing DeSantis for raising taxes is a familiar topic of conversation. In an April video, Fried said, “Last night Ron DeSants raised your taxes by over a billion dollars. (His press office announced the signing of the bill at 11:23 p.m. in an email)

The state estimates that its new online sales tax change law will bring in an additional $ 1 billion annually, bringing Florida in line with the rest of the country.

“A $ 1 billion tax hike” for consumers

Technically, online sales tax isn’t new to Florida. In practice, however, this means that online Florida consumers will pay taxes on some purchases that they have not previously made.

The Florida Legislature passed SB 50 along the party lines with Republican support. The new law requires foreign retailers and marketplace providers with no physical presence in Florida to collect Florida sales tax on items shipped to Florida customers. The rule applies to sellers with more than $ 100,000 in sales in Florida. The bill will come into force on July 1st.

Florida charges a 6% sales and use tax on the sale of goods. Customers are required to pay the state taxes owed on the purchase of an untaxed item. However, according to an analysis by the legislative staff, hardly anyone did.

A 2018 U.S. Supreme Court ruling – South Dakota v Wayfair – paved the way for more states to levy sales taxes on online purchases. The court removed the requirement that a seller must be physically present in a state in order to collect and pay sales taxes to that state. Following the ruling, states passed new laws to levy taxes on online purchases. Florida was one of the last states to pass such a law among states that levy statewide sales taxes.

“In the vast majority of states, the process of updating Wayfair sales tax laws has been undisputed, in large part because the tax collected is not a new tax, but a tax that was already owed,” said Katherine E. Loughead , Analyst at the Tax Foundation.

Business groups like Florida TaxWatch and the Florida Retail Federation had urged state lawmakers to pass such a law so that it would apply equally to companies that operate in and outside Florida and sell to customers in Florida.

The money from the tax will initially be used to top up the state unemployment fund and later to lower the commercial rental tax.

Jared Walczak, a researcher at the tax foundation, estimates the law will cost online shoppers an additional $ 40 to $ 50 per year on average.

“A tax break of $ 500 million for our companies”

In 2018 – when Rick Scott was governor – Florida lawmakers launched a corporate tax refund following the passing of the 2017 federal law on tax cuts and jobs signed by President Donald Trump. This federal law expanded the corporate tax base by expanding the definition of corporate income while lowering the corporate tax rate.

Because Florida uses the state definition of corporate income as the starting point for state corporate income tax, the federal changes resulted in additional corporate income pouring into Florida’s tax base, Loughead said.

If Florida had adopted all of the changes to the federal tax law, it would have increased corporate tax liabilities.

In 2018, lawmakers passed a bill that would lower the corporate tax rate for one year if 2018-19 net income exceeded projections by 7%. The bill stipulated that in spring 2020 all excess collections would be refunded to eligible corporate taxpayers. Only about 1% of companies pay Florida corporate tax.

In 2018, the state didn’t know how much money that would add up – or that Florida would face the economic downturn in 2020 when stores shut down because of the pandemic.

So why does Fried imply the corporate tax refund is to be owed to DeSantis, who took office in 2019?

In the spring of 2020, amid the pandemic, Democrats called on DeSantis to cancel the estimated $ 543 million in refunds in an attempt to save the state money.

“Refunding $ 543 million to corporations is a spending decision and it’s a bad one right now,” said Carlos Guillermo Smith, Rep. Carlos Guillermo Smith, Orlando D-Orlando. “It shouldn’t be a priority for the leaders of a state worried about how to pay teachers, health care, and transportation as our tax revenues are disappearing.”

However, DeSantis remained committed to corporate reimbursement.

“Corporate taxpayers who are legally eligible for these automatic tax refunds have anticipated those refunds and likely made business decisions in their local area,” said Ryan Ash, spokesman for DeSantis, of the Orlando Sentinel in March 2020.

The refunds issued in April 2020 benefited 19,546 taxpayers, according to a US Treasury Department spokesman. Average performance was $ 27,793.49.

Our verdict

Fried said DeSantis “signed a $ 1 billion tax increase for our state’s people and our consumers, but gave our businesses a $ 500 million tax break.”

In April, DeSantis signed an online sales tax bill that the state predicts will generate an additional $ 1 billion a year. Online shoppers should pay these taxes if they weren’t, but hardly any. Florida’s new law brings it in line with other states that have statewide sales taxes.

The tax break refers to a bill that state lawmakers passed in 2018 in response to federal tax law before DeSantis became governor. The bill resulted in corporate taxes being reimbursed above a certain threshold so that their payments remain roughly the same. The Democrats asked DeSantis to cancel the refund, a request he declined.

Fried’s claims have an element of truth but ignore critical facts that would give a different impression. We rate this statement as largely false.

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