Q&A – What’s Better? Cutting Property Taxes or Sales Taxes?
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Social: @brianmuddradio
iHeartRadio: Use the Talkback feature – the microphone button on our station’s page in the iHeart app.
Today’s Entry: Hi Brian, What’s the best value for most Floridians – cutting property taxes or sales taxes? Which of the two plans would provide the biggest benefit to the most people. Thank you.
Bottom Line: The battle over tax cuts is on in Florida. Specifically, the battle is over what the best way is to cut taxes in Florida. Florida’s economy has remained strong, growing into one of the largest in the world over the past decade (#16th most recently). Rather than continuing to grow the size of the state’s government through increased spending, Governor DeSantis set the stage with his proposed “Focus on Fiscal Responsibility” budget. The budget calls for spending less in the upcoming year than the state of Florida is spending in its current fiscal year which ends in June. And as for the savings – Governor DeSantis wants to pass it back to you in the form of tax cuts. Florida’s House Speaker Daniel Perez agrees, only he sees the way to pass on the savings considerably differently.
Governor DeSantis has proposed offering a $1,000 property tax rebate to homesteaded Floridians in December. As he’s said: Of all the taxes that are impacting Floridians right now, property taxes are the most significant. Meanwhile, Speaker Perez favors a proposal that would cut Florida’s state sales tax from 6% to 5.25%. So, in addressing today’s question, which of the two plans would provide the biggest benefit to most people?
That question is easy to answer conceptionally. Without a doubt cutting the state sales tax would provide the biggest benefit to most people. And that’s due to everyone being able to participate in the savings every time they buy anything. Conversely, under DeSantis’s plan, there are many who wouldn’t see a benefit from the property tax policy. Due to the plan currently only calling for the property tax rebates applying to homesteaded properties, many Floridians wouldn’t participate including:
- Non-homestead property owners
- Renters
- Business owners
But let’s say that you are a homesteaded property owner, would DeSantis’s proposal be a better deal for you? Let’s dig in.
The proposed sales tax cut from Perez, amounts to a 12.5% reduction in the amount of sales tax charged to you by the state. But the question is what would it take for the reduction to equal the savings of the $1,000 property tax credit. The answer is spending $133,333.33 - on items taxed by the state. So yeah – that's not going to be too many people. For perspective, the average total household spend for all expenses, not just those that require paying state sales taxes, is $77,280 per year. Most Floridians don’t come close to earning over $133k, let alone paying sales taxes on $133k. So, this means that for most homesteaded Floridians, DeSantis’s plan is the much better plan.
By way of comparison the Perez sales tax cut plan would equal at most, about $580 in annual savings for the average homesteaded property owner. So, depending upon whether you rent or own, and also depending on whether you’re spending along with the top 5% in Florida determine which of these proposals is best for you.