A key issue to be resolved in the remaining weeks of the legislative session is the size and composition of tax cuts – and how much they will reduce revenue in future years for investing in state services.
The final tax cut package eventually negotiated between the Senate and the House and signed by the Governor has ramifications beyond the 2016-17 fiscal year, when the cuts will go into effect. The size of any recurring tax cut is compounded year after year. A $10 million cut in taxes one year will also reduce revenues by that amount in the next year, and the one after that.
Thus the decisions made about tax cuts in this legislative session will impact the amount available for appropriations to meet state needs not only this year, but also future years. Governor Scott’s proposals would cut $1 billion from the budget year after year and the House budget almost $1 billion over the next three years. The Senate tax cuts being considered would take a smaller bite, the amount depending on how much are recurring reductions and how much nonrecurring.
A tax cut is a tradeoff; corporations benefit when their taxes are cut, but at the expense of Floridians who rely on state support for their well-being.
Read the full by the Florida Center for Fiscal and Economic Policy here.