Broader Legal Front Against Florida’s Two-tier Property Taxes

Broader Legal Front Against Florida’s Two-tier Property Taxes
Lots of new developments on the legal front, but before I get to the legal update, I came across an interesting article by John Brady from Madison, Connecticut writing in the NYT’s “Retire the property-tax” “The property tax is a concept whose better days are behind it. It concentrates on one asset while ignoring income. Two people in similar homes pay the same tax — even if one lives on Social Security and the neighbor makes a huge salary and has millions in stocks. The most obvious drawback of the current property tax system is that since it ignores a person’s income, it causes undue hardship for retired people and those going through tough times.” His conclusion, though perhaps inapplicable for Florida (which doesn’t even have a state income tax) is a municipal income tax; Mr. Rubio’s original, now (temporarily?)discarded, proposal to have sales taxes replace property taxes, seems like a more equitable and broader based tax system that distributes cost in proportion of what people spend (higher income individuals spend more, so they pay more and in florda tourists/visitors would pay slightly more). For what it’s worth, his observation that “property tax is a concept whose better days are behind it” is even more applicable to Florida where, unlike Connecticut, it is rare that “two people living in similar homes pay the same taxes”! The more recently that you bought your property and the smaller the burden that you place on Florida’s services (e.g. part-time residents), the higher property taxes that you pay! Doesn’t sound like a recipe for attracting new, part-time or full-time, residents.
Coincidentally, today’s (December 26, 2007) headlines in Florida’s papers trumpet Miami as the U.S. city with the largest one year (to October) drop (12.4%) in property values. Another Florida city, Tampa, has the distinction of the second largest one year drop (11.8%) on the 20 city S&P/Case-Shiller Home Price Index. By the way, this index is based on single family homes; no doubt that Florida condominiums have fared a lot worse.
It is also worth re-telling from my December 16th blog, that the Florida property tax ‘tragi-comedy’ continues. The Miami Herald reports that (governor) “Crist opens tax plan drive” while the Sun-Sentinel warns that “Firefighters, teachers and others lining up to oppose property tax cuts” and opposition is building against the property tax amendment to be voted on January 29th. Lining up in NO corner are firefighters and the teachers (fearing reduction in essential services and no doubt job losses), Florida TaxWatch ( “relief to those who need it least, while giving virtually nothing to those that have seen their taxes rise the most”, but not clear if part-time out-of-state residents are considered or are even on their radar), League of Women Voters, League of Cities (we don’t want to get off the gravy train) and the Florida PTA. In the YES corner next to Governor Crist is Donald Trump (?), Florida Association of Realtors , Florida Chamber of Commerce, Associated Industries of Florida, Florida Medical Association, Florida Power and Light. Not clear to me if the partial truths stated as the reasons as to why most of these groups have taken a particular position would stand up to even superficial logical scrutiny, but then this is Florida, and few care or have the foresight to care about much beyond their immediate short-term self interests, with total disregard of how the collateral damage inflicted on many others (renters, first-time home buyers, part-time residents, businesses, investors) will come (or perhaps is already coming) back to haunt the state’s future economic growth or shrinkage!

Moving on to the news on the widening legal front against the discriminatory property tax system in Florida, The Sun Sentinel’s “New lawsuit alleges inequities in property taxes on homes”  reports on a new suit launched by the same attorneys as the earlier constitutional challenge by the Alabamans. The Alabamans’ suit attacked the unfair treatment of part-time non-homesteaded property owners (i.e. non-homesteaders vs. homesteaders), whereas the new suit is on behalf of recently homesteaded property owners (new homesteaders vs. old homesteaders). (By the way Florida’s Save-Our-Homes amendment presents many other opportunities for constitutional challenges, such as renters vs. homesteaders, businesses vs. individuals, investors vs. individuals). The new suit also challenges the proposed “portability” amendment on the upcoming January 29th ballot, which a recent Florida legislature commissioned independent external report already indicated to likely fail the constitutionality test. Palm Beach County tax collector Anne Gannon, one of the defendants named in the suit, felt that rectifying the unfair treatment of non-homesteaders would “wreak havoc with our government”…well of course, because once voters would have to bear the yoke for government’s out-of-control expenditure increases, government would have to stop spending like a drunken sailor. Of course the suit asks for a refund of the excess taxes borne by new homesteaders over the past four years, and Anne Gannon felt that would be an even more difficult matter to implement. The Alabamans’ original case continues in the appeals process; Florida’s legislators’ great fear will hopefully be realized when that case finally gets to be heard in non-Florida court, the U.S. Supreme Court!

I have also become aware of a private individual, who is preparing to launch a case in federal courts on fresh constitutional grounds, early in the New Year. I t is great to see, that the recent short-term reduction of the property tax pain, resulting from property values ‘dropping like a rock’ in Florida, are not anaesthetizing the long-suffering non-homesteaded (or newly homesteaded residents) into inaction.

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