Florida’s Amendent 1 Whitewash – UPDATED

Was just watching Michael Putney discuss the new property tax relief amendment to the Florida constitution that will be on the ballot on Jan. 29.
First, my position. I’m against this amendment.
Now the reason. I’m against the amendment because it does not go far enough, nor does it remedy the actual problems we’re facing.
To me the biggest problems we face with property taxes in Florida is that property taxes have no correlation with the actual value of the property being taxed. We have something called “Save our homes” which sounds very nice but is the reason we’re in this mess. Under the existing “Save our homes” framework your taxes on your primary residence can’t increase by more than 3% per year. It’s a sort of protection against booming property values, so that homeowners can “save their homes”.
The problem is that when you move, the new property you just bought gets appraised under current market conditions. And the problem with that is that you could be paying 10 times more taxes than your next door neighbor who has the same exact type of home. In, short it’s a pyramid scheme with the last guy in getting hosed. This scheme worked for a while but as more and more people moved and faced the repercussions we arrived at the current mess where people are locked in their homes, unable to downsize or upsize because of property tax implications. As a result the real estate market has slowed considerably along with all related businesses.
Amendment 1 would compound this error by implementing something called “portability”. Under portability if you move you’ll be able to transfer your savings under save our homes (as a percentage) to your new home. Instead of simplifying the system this only adds another level to the house of cards. Plus, it still treats different homeowners differently. The biggest beneficiaries of the portability are the people that have been in their present homes the longest. When they move they’ll save much more than those who bought during the recent boom. And these are the people that were benefiting the most all along. The pyramid scheme continues.
I am against taxing property as a means for raising revenue. It doesn’t make sense to me. If you tax property perpetually then nobody ever truly owns their property. Property taxes have no correlation to the homeowner’s financial situation. If you lose your job you pay less income tax because you lose income and you pay less sales tax because you consume less, but that property tax bill will still come in November and it’s never for less than the previous year.
There’s also huge problems with the current scheme related to who makes the laws and who gets the money. These taxing schemes need to be approved in Tallahassee but the money largely goes to the cities and counties. I think local taxes should be set and raised at the local level. That way the market can operate freely. High tax districts will lose residents to low tax districts. The local officials are engaging in demagoguery on this by claiming that services and education will suffer if budgets are cut. That’s funny because I didn’t see any proportional improvement of those services when the real estate prices (and therefore tax revenues) were booming.
So I’m voting no on Amendment 1, but not because of the demagoguery of local officials. I’m not as concerned with the budget cuts as I am with the fact that they aren’t cutting enough.
Let’s get rid of the taxes on real estate and find a more equitable way of collecting revenues for the state.
Amendment 1 is another in the long line of band aids that will have unintended consequences and lead people to falsely believe the problem is solved. That is until they want to move.
UPDATE:
Our old friend Juan Paxety agrees and has some information from the non-partisan Florida TaxWatch organization that backs up the arguments against amendment 1.