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The business climate gauge remains at a neutral position due to:
- National ranking for legal climate drops to 42nd despite recent trot reform
- Increase cost in doing business (rent, energy and insurance)
- 74% of US executives view Florida as having a favorable business image
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Amid this downturn, the state’s tax structure is still seen as a strength for businesses. Florida’s per capita state and local tax burden is $3,687, placing it 25th in the nation. Its tax burden of $108-per-$1,000 in personal income rank it 40th nationwide, a finding that reflects Florida’s place as a state with wide income disparity.
The Milken Institute’s 2007 composite index on the cost of doing business ranked Florida 19th highest in the nation when accounting for wages, taxes, utilities and office expenses. Florida was listed as fourth in the nation for high-tech employment and wages, with 282,091 employed in the industry in 2006, earning an average $68,413 annually.
Per 1,000-workers, however, Florida’s high-tech ranking is 29th among the 50 states, showing that jobs in this coveted sector of the economy remain tightly concentrated in certain regions of the state, particularly Central and South Florida.
A state constitutional amendment approved in January has set new property tax limits that may help the business climate. The measure allows non-homesteaded property assessments to climb no more than 10 percent annually and also grants a new, $25,000 property tax exemption for tangible personal property – covering equipment and supplies used by most Florida businesses.
More far-reaching property tax measures, including a proposal to eliminate billions of dollars of school property taxes, possibly in exchange for a one percent increase in the state’s 6 percent sales tax, was struck from the state ballot by the Florida Supreme Court, which ruled its ballot language was unconstitutional. The measure had been opposed by leading business organizations which feared it could shift more of the state’s property-tax burden to non-residential properties.
The state, however, in 2008-09 is facing a $2 billion budget deficit, which is expected to grow to $4 billion next year. That fuels the likelihood that political focus will remain intense on the state’s tax system.
Although the state’s 6 percent sales tax brings in roughly $24 billion in revenue, exemptions shield another $4 billion from the levy, even if current exemptions for food, rent, prescription drugs and electricity are maintained. Most services in Florida are also exempt from the state sales tax and now represent close to $24 billion in potential revenue.
The Legislature has been wary of reviving a battle over taxing services after the Legislature in 1987 approved and soon repealed a sweeping services tax. But with Florida’s economy expected to be on a downward trajectory into 2010, debate over higher taxes is expected to frequently flare in coming months.
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