03/01/97 - Backgrounder #20 - Florida's Intangibles Tax: A Large Burden for a Small Return

by Randall Holcombe
March 1, 1997

Executive Summary

• Florida's intangibles tax is a tax on certain financial assets, including stocks, bonds, loans, and related items.
• The intangibles tax raises a relatively small amount of revenue.  In 1996 the tax raised $720 million out of a state budget of $39.1 billion.  Thus, intangibles tax revenues finance less than two percent of the state's budget.
• Intangibles tax revenues have increased substantially since 1990, both in absolute terms and as a percentage of Florida's budget.  Thus, it seems reasonable to review the impacts of the intangibles tax more closely to evaluate the desirability of the tax, and of recent changes in the tax.
• About half of intangibles tax revenues come from individuals and half from businesses.  Stocks are the largest group of assets on which individuals pay the tax, while loans (including accounts receivable) are the largest group of assets on which businesses pay.
• A tax on intangible financial assets has some similarities to a tax on the income from those assets.  While income taxation is prohibited by the Florida Constitution, an intangibles tax gets around that restriction by taxing the wealth on which the income is earned.
• The tax places a significant reporting burden on individuals who must pay Florida's intangibles tax.  This is the only Florida tax the requires individuals to fill out a tax form.
• The tax discriminates against those who earn investment income as opposed to labor income.  This group includes wealthy people and retirees, who in general contribute more to the finances of Florida's government than they take away.  As a tax on investment, the intangibles tax discourages economic growth.
• Since the intangibles tax rate has been increased in the 1990s there is now a greater incentive to seek legal methods of tax avoidance, and there is some evidence that avoidance activity has increased since the rate increases took effect.
• Florida's economy and its state government would fare better financially if the intangibles tax on individuals were repealed.

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Backgrounders

• 2008 March - Backgrounder - Lost Opportunity: An Empirical Analysis of How Vouchers Affected Florida Public Schools
• 2008 February - Backgrounder No. 55 - Restoring Florida's Insurance Market
• 2007 December--Backgrounder No. 54--The Case for Florida to Enact a Taxpayer Protection Amendment
• 2007 October--Backgrounder No.53--Statewide Growth Management and Housing Affordability in Florida
• 2007 August--Backgrounder No.52--Florida's Medicaid Reforms: A Progress Report
• 2007 February--Backgrounder No. 51--Expanding Opportunities for Health Insurance Coverage in Florida
• 2006 December - Backgrounder #50--Florida's Fiscal Constitution: Opportunities for Reform
• 2006 September - Backgrounder #49 - Elements of an Energy Policy to Benefit Florida and the Nation
• 2006 March - Backgrounder #48 - A Paycheck Protection Primer for Florida
• 11/01/05 - Backgrounder #47 - Empowering Florida's Taxpayers
• 09/01/05 - Backgrounder #46 - Property Rights At Risk?
• 08/01/05 - Backgrounder #45 - Public Employee Collective Bargaining: The Florida Experience
• 04/01/05 - Backgrounder #44 - Making Florida's Government Competitive
• 02/01/05 - Backgrounder #43 - Reforming Florida's Medicaid Program With Consumer Choice and Competition
• 12/01/04 - Backgrounder #42 - Is Florida's Tax Structure Ready for the 21st Century?
• 02/01/04 - Great Rail Disasters - The Impact of Rail Transit on Urban Livability
• 07/01/03 - Backgrounder #41 - Raise Excise Taxes? Not In Florida
• 06/01/03 - Backgrounder #40 - Florida's Intangibles Tax: The Case for Repeal
• 05/01/03 - Backgrounder #39 - Florida's Constitutional Ballot Initiatives: Is This Any Way To Run Government?
• 03/01/03 - Backgrounder #38 - The Living Wage Movement and Its Implications for Florida
• 03/01/03 - Higher Education in Florida: The Special Role of the Independent Colleges and
• 03/01/02 - Backgrounder #37 - Playing Doctor in Tallahassee: How Lawmakers' Efforts to Save Money May Threaten Quality Care for Mentally Ill Medicaid Patients
• 02/01/02 - Backgrounder #36 - Local System: Statewide Obligation The 2002 Florida High Speed Rail Authority Report
• 01/01/02 - Backgrounder #35 - Water Management Policy in Florida: Regional Politics and Market Development
• 06/01/01 - Backgrounder #34 - 'Just Say No' to State Building on Workforce Development: Reinvigorating Labor Markets and Preserving the Federal Principle in Florida
• 05/01/01 - Backgrounder #33 - Oil and Gas Energy Issues in Florida's Future
• 04/01/01 - Backgrounder #31 - The Case against Public Subsidies for a New Florida Marlins Stadium
• 03/01/01 - Backgrounder #30 - Education Performance in Florida - A Need for Change
• 10/01/00 - Backgrounder #27 - Florida's Tax Structure: An Overview and Evaluation
• 06/01/00 - Backgrounder #26 - Deciding the Future of the Past: The Miami Circle and Archaeological Preservation
• 02/01/99 - Backgrounder #25 - Unfunded Mandates: The Florida Experience
• 07/01/98 - Backgrounder #23 - Florida's State Sovereignty Land Claims
• 11/10/97 - Backgrounder #21 Addendum
• 06/01/97 - Backgrounder #22 - Comparing Spending and Performances in Florida's Public Schools and Colleges
• 04/01/97 - Backgrounder #21 - Evaluation of the FDOT-FOX Miami-Orlando-Tampa High-Speed Rail Proposal
• 03/01/97 - Backgrounder #20 - Florida's Intangibles Tax: A Large Burden for a Small Return
• 08/01/96 - Backgrounder #19 - Public Subsidies to Private Corporations: Stop Violating the Florida Constitution!
• 09/01/95 - Backgrounder #17 - Florida's Growth Management Experiment: An Analysis
• 08/01/95 - Backgrounder #11 - Florida's Spending Cap: Will It Work?
• 04/01/95 - Backgrounder #16 - The Private Sector Health Care Revolution
• 01/01/94 - Backgrounder #12 - Eleven Steps to a Safer Florida
• 11/01/93 - Backgrounder #09 - The Welfare State, Poverty, and Economic Opportunity
• 10/01/93 - Backgrounder #10 - Issues in Health Care Reform and Solutions That Work

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