Florida Cigarette Tax Update

Florida Republicans are having a nightmare. For years they have ran on an anti-tax platform. They are forced to squirm over the possibility over the possibility of raising cigarette tax. The Florida Senate Finance and Tax Committee voted unanimously to move SB 1840 for a floor vote. The tax on a pack of cigarattes will go up a dollar. Cigarettes will also be taxed by bulk.

210.011 Cigarette surcharge levied; collection.—
(1) A surcharge, in addition to all other taxes of every kind levied by law, is levied upon the sale, receipt, purchase, possession, consumption, handling, distribution, and use of cigarettes in this state, in the following amounts, except as otherwise provided in subsections
(2) and
(3), for cigarettes of standard dimensions:
(a) Upon all cigarettes weighing not more than 3 pounds per thousand, 5 cents on each cigarette.
(b) Upon all cigarettes weighing more than 3 pounds per thousand and not more than 6 inches long, 10 cents on each cigarette.
(c) Upon all cigarettes weighing more than 3 pounds per thousand and more than 6 inches long, 20 cents on each cigarette.

The House is likely to vote down the cigarette tax. Gov. Charlie Crist has skillfully avoided answering if he would sign the cigarette tax into law.

Side note: anyone else bothered by Crist's support of user fees but not taxes. Talk about double standards.



Update: Rep. Ellyn Bogdanoff worries the cigaratte tax will hurt the junk food market.

"Twenty-two percent of all sales in convenience stores are cigarettes. We need to look at everything. IF they don't go in to buy cigarettes, they don't buy the coke. They don't buy the chips.''

It certainly is the most entertaining anti-cigarette tax argument. I give Bogdanoff points on originality.

Florida Sales Tax Exemptions

Florida is facing a budget shortfall, members of the House Finance & Tax Council were asked what sales taxes should be repealed. Tom Grady (R-Naples) came out against repealing any sales tax. Jim Waldman (D-Coconut Creek), Rich Workman (R-Melbourne) and John Tobia (R-Satellite Beach) mentioned bottled water as a possibility. No one went on-record supporting a bottled water tax. Ron Schultz (R-Homosassa) brought up "satellites which are up there." I think Schultz is confusing satellite television taxation with outer space satellites. Satellite tv is taxed in Florida. I have questions about if taxes on outer space satellites are legal under Florida law.

The Florida Department of Revenue estimates repealing the bottled water sales tax would raise an estimated $42.3 million. I would support repealing the tax. Especially since so many Florida communities go through water shortages. A bottled water tax alone isn't going to solve Florida's budget woes.

Troll Hall of Fame: Bryan

Bryan used to troll around Pushing Rope and Tas's defunct blog Loaded Mouth. Tas and I took great joy in mocking Bryan. In 2006, Bryan promised to write a muckraking expose on Tas. Bryan never got to the article because of his busy schedule trolling other progressive blogs.

I wrote the post "Charlie Crist Economics 101." I argued the housing bubbble popped and sales taxes wouldn't pay for Florida's growth. I didn't know residents would start leaving the state. Creating a smaller tax base. Since then the housing market tanked and Florida is in a budget deficit. Bryan took pains explaining to me that this would never happen.

The article you linked indicates a substantial surplus in the current budget.
Given that Crist is correct about Florida's growth, what exactly is wrong with his economic understanding, assuming that that the inherent instability of sales-tax revenue in a tourist-reliant state doesn't lead to an exceptional decrease in revenue?

And if that were the case, wouldn't Crist be able to react in some manner, as by recommending a change in policy to account for the loss in revenue?

What policies changes has Charlie Crist instituted besides raiding trust funds and borrowing money? Cutting programs for the needy and driving the state in debt is not sound policy. Crist balked at the cigarette tax and walked away from Seminole Indian Tribe controversy.

Crist negotiated the deal without legislative approval. The Florida Supreme Court ruled the gaming compact unconstitutional. The Seminoles refused to shut down the blackjack and slot machines. Republicans have asked the federal government to intervene. The state is losing $100 million in tax revenue and Crist has remained silent on his mess.

Bryan the troll declares growth will save Florida.

If Florida is having problems paying for current growth management, then why is there a current surplus?

The housing bubble "popped"?
The bubble pops when prices start going down, not when the rise in prices slows.
http://www.naplesnews.com/news/2006/jul/12/economist_southwest_florida_housing_market_cooling/?business

Your argument against Crist's understanding of economics boils down to your past observations of tax cuts with increased spending?

We should assume that your past observations were made with similar anticipations of growth, or what?

Where is that Florida surplus, Bryan? The housing bubble popped when people stop buying houses. That is exactly what happened in Florida.

Bryan continues to argue the 2006 housing market was fantastic.

"Do you read your links?"

Of course. What part did you quote that you think translates into the housing market having popped?
The part about decreased confidence about the future?
Does "downward momentum" mean slowing price gains or decreasing prices?

Do you just read into stuff what you want to see, or what?

In 2006, I saw Florida in economic trouble. Bryan, I could ask you if you saw what you wanted to see. But that would be a pointless rhetorical question.

Bryan, you are the first inductee into the Pushing Rope Hall of Fame.

Side note: trolls using performance enhancing drugs will be disqualified.

When Grover Norquist barks Republicans jump. Mike Haridopolos unveiled a letter Norquist sent him against the property taxes decrease and sales tax increase. Norquist

"If this plan is passed along the legislature, any legislator who votes to place this measure on the ballot would be violating the Taxpayer Protection Pledge," Norquist’s letter continues.

Former Alabama Governor Bob Riley (R) attempted to raise taxes to pay for education. Norquist's organization the Americans for Tax Reform helped kill Riley's tax plan and placed the Governor on their enemies list. Norquist can rally conservative economic and Christian activists to kill a Republican politician's career.

Why Norquist is still taken seriously is a mystery. He campared the estate tax to the Holocaust. Norquist used pro-gambling Indian tribe money for a donation to the anti-gambling Alabama Christian Coalition. Norquist's friend Jack Abramoff told an Indian tribe to donate to the ATR. Norquist failed to inform the tribe or the Christian Coalition about the money exchange. All this was to help their longtime friend Ralph Reed.

Abramoff used ATR as a conduit in 1999 and 2000, for example, to send some $1.15 million from the Mississippi Choctaws to the Alabama Christian Coalition and to an allied anti-gambling group in the state. The funds were for a campaign spearheaded by Ralph Reed, the former Christian Coalition leader-turned-business-consultant, that helped to defeat a proposed gambling venture in Alabama that posed a financial threat to the Mississippi Choctaws' casino enterprises.

Abramoff, Norquist and Reed viewed Indian tribes as their personal ATM machine.

Some Abramoff e-mails released by the Senate Indian Affairs Committee also indicate that Norquist took a cut of the Choctaw funds for ATR. In a February 7, 2000, e-mail, for instance, Abramoff cautioned Reed that he might be receiving a little less than expected because "I need to give Grover something (for helping), so the first transfer will be a little lighter." Then on February 22, Abramoff sent an e-mail memo to himself voicing surprise that "Grover kept another 25K!" Norquist told Time that he twice received permission from the Mississippi tribe to keep $25,000.

The fact that Haridopolos would seek out Norquist's approval is disturbing. Norquist backed Bush's disasterious first budget package. Norquist openly brags, "I think I've gotten more radical as I've gotten older."

I personally think the property tax/sale tax swap is a bad idea. It is amusing that conservatives are coming out against Marco Rubio's plan. Rubio is better at getting (bad) publicity than getting things done. In politics, that is all that matters.

Rubio Attempts Another Sales Tax Shift

Florida counties and municipalities increased property taxes because of tax cuts by Jeb Bush and the legislature that created less revenue for schools. Marco Rubio attempted to cut property taxes by creating one of the highest sales taxes in the country. He is now attempting to create a smaller version of that sales tax shift.

But after his speech, the House Policy and Budget Council voted to include a 1 cent sales tax increase in order to cut school property taxes by nearly $4-billion a year. The average property owners' tax bill would drop by 15 to 20 percent, Republicans said.

Rubio floated the idea earlier this year only to meet a roadblock in the Senate. Then, as now, senators view it as a tax increase, a regressive one at that.

It is a sales tax increase and will hurt poor people the most. Contrary to economic zenmasters such as Dennis Hastert and Grover Norquist, a national sales tax does not make up the differnce. Robert S. McIntyre broke down the bogus math of the Americans for Fair Taxation.

I was curious about how the group did its arithmetic, so I checked out its Web site--www.fairtax.org--and sent a note to the E-mail address to get further information about the group's calculations.

According to the group's figures, at 1995 levels a new sales tax would have to raise $1.36 trillion to replace all Federal income taxes, payroll taxes and estate and gift taxes. Under its plan, the group says, taxable spending would be $4.6 trillion (after accounting for rebates to partly protect lower-income families).So, $1.36 trillion divided by $4.6 trillion would be the required sales tax rate. Fine, except that $1.36 trillion divided by $4.6 trillion is not 23 percent. It's about 30 percent.

It turns out that the group's purported 23 percent tax rate is misleading and hypothetical. It came up with that number by dividing the sales tax by the cost of a purchase plus the tax. So if the tax on a $100 purchase is $30, the group prefers to call it a 23 percent "tax inclusive rate" ($30 divided by $130). Ever hear of computing a sales tax like that?

The fact that the group's sales tax, even by its own figures, entails a 30 percent tax rate is only the beginning of the math problems. The group's backup materials also assert that almost a third of its projected sales-tax revenue is supposed to come from taxes the Government will pay to itself. Build a road, pay yourself a tax. Buy some planes for the Air Force, pay yourself some more. And so on.

Unfortunately, that shell game won't work. Without these phantom governmental tax payments, the sales tax rate would have to jump to 42 percent to break even.

Conservative love sales taxes as the answer to all ails. Unfortunately, sales taxes by themselves can fund very little. Unless, people want to pay a nearly 50 percent tax for shopping items. How is that not regressive?

The National Sales Tax

Fun fact: the national sales tax is an idea originated by the Church of Scientology. Bruce Bartlett explains:

For those who never heard about it, the FairTax is a national retail sales tax that would replace the entire current federal tax system. It was originally devised by the Church of Scientology in the early 1990s as a way to get rid of the Internal Revenue Service, with which the church was then at war (at the time the IRS refused to recognize it as a legitimate religion). The Scientologists' idea was that since almost all states have sales taxes, replacing federal taxes with the same sort of tax would allow them to collect the federal government's revenue and thereby get rid of their hated enemy, the IRS.

L. Ron Hubbard and the Church of Scientology didn't pitch a national sales tax because it was a good idea. They just hated the IRS. That might have something to do with Hubbard embezzling millions.

A national sales tax has been pitched in Freedom Magazine. The publication is run by (you guessed it) the Church of Scientology.

Find an economic idea conservatives love and it is bound to have a bizarre origin.

I Agree With Giuliani

Rudy Giuliani is booed in Jacksonville. For not supporting abolishing the federal income tax.

Several dozen people wearing white fair tax T-shirts and hats and carrying signs briefly jeered when Giuliani, in response to a question, said he would not be in favor of the fair tax system.

"I have to study it some more," the former New York City mayor said. "I don't think a fair tax is realistic change for America. Our economy is dependent upon the way our tax system operates."

"Fair tax" proposals would abolish federal income taxes and other federal taxes and replace them with a national sales tax.

This national sales tax is a horrible idea supoported by conservatives and Democrat Mike Gravel. I have a hard time believing a national sales tax pitch will fly with voters after seeing how it crashed and burned in Florida. This maybe one of the few times when I actually agree with Giuliani. Mark the day on your calendar.