Florida TaxWatch: State 47th in nation for taxation

Florida’s state government tax burden is one of the lowest in the nation – No. 47. But a closer look at each individual’s tax burden finds the ranking a bit higher, according to the Florida TaxWatch report, “How Florida Compares.”

“One specific tax ranking cannot tell the whole story,” says Dominic M. Calabro, president and CEO of Florida TaxWatch, an independent, nonpartisan research institute. “It is our hope that this more comprehensive report will help taxpayers and policymakers better understand how states fund their governments and demonstrate that low taxes in one area often means higher taxes in another area.”

Floridians’ per capita state tax burden fell to 47th in 2012 (latest data available) – the lowest rankings since Florida TaxWatch began tracking them. However, Florida’s per capita tax ranking (No. 22) was higher than many other states in 2011 (latest available data.)

When combined, Florida’s per capita tax ranking is 37.

From 2006 to 2012, Florida’s state tax collections saw the largest decrease in the nation: 17.6 percent.

Prior to the recession, Florida’s total tax and revenue rankings had been climbing steadily, due in large part to skyrocketing property taxes. In 2006, Florida’s combined state and local tax rankings had climbed to the 22nd largest in the nation. Since 2006, Florida has dropped 15 places in the state and local tax collection rankings.

“Because Florida relies more on local governments to fund public services than all but one state, and uses non-tax revenues more than most states, it is imperative to look at the whole picture of revenue collection when comparing the cost of government,” says Kurt Wenner, TaxWatch’s vice president of tax research. “When you consider combined state and local revenue, Florida becomes more of a moderate tax state than a low tax state.”

The report finds that Florida’s local governments raise 55.6 percent of all Florida government revenue – the second highest percentage in the nation.

It also shows that 38.9 percent of revenue comes from non-traditional tax sources, the 10th highest percentage in the nation. Non-tax revenue includes special assessments, charges for services, impact fees and net lottery funds. In some cases, TaxWatch says government calls these taxes a “fee” instead of a tax.

The report also finds that 54 percent of Florida’s state and local taxes come from businesses – the nation’s eighth highest.

Another unique feature of Florida’s tax structure is the heavy reliance on transaction taxes. Sales and excise taxes account for 82.6 percent of all Florida’s state tax collections, compared to the national average of 47.1 percent. Florida taxes utilities, alcoholic beverages and motor fuels much higher than most states, TaxWatch says. However, many other states also have a personal income tax that Florida does not.

The tax study is available online at the Florida TaxWatch website.