Florida’s corporate tax rate of 5.5% is among the lowest in the U.S. But if it were solely up to Rick Scott, it would be completely eliminated. The governor campaigned in 2010 on eliminating the state’s corporate tax by the end of his second term in office. Although the Legislature has resisted such a tax cut so far, there is a proposal in the Legislature this year that would increase the corporate income subject to taxation from $50,000 to $75,000.
A new report from a government watchdog group, though, says that the most profitable Fortune 500 corporations headquartered in Florida have been paying less than half of that 5.5% rate, while receiving taxpayer-funded subsidy deals and government contracts at the same time. Perhaps not coincidentally, it also says those same companies have spent “heavily” on state-level political campaign contributions and legislative lobbying in Florida.
“There’ s too much secrecy,” said Dan Krassner, executive director with Integrity Florida, a nonpartisan research group based in Tallahassee that produced the report. “The public knows how much we’re paying out of our pockets to the big corporations for government contracts and subsidies, and we deserve to know more about the corporate profit taxes that those companies pay back to the states.”
The report called “Subsidizing Corporate Tax Dodgers” was released Wednesday at a press conference in Tallahassee.
Integrity Florida says that although the corporate profits tax rate in Florida is set at 5.5%, the 13 profitable Fortune 500 corporations headquartered in Florida paid a 2.7% average corporate profits tax rate to state governments in the U.S. between 2011 and 2013. Those same corporations made $35.1 billion in estimated profits in those years, and paid an estimated $945.7 million in total corporate taxes in those same two years.
It should be noted that Integrity Florida does not have true statistics about how much (or little) those companies are paying in Florida since state law does not require them to list that information. Integrity Florida says that the group was able to extrapolate that information with help from the staffs of Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP). Tampa Bay-area based corporations such as Publix, Jabil and WellCare Health Plans are among those companies.
Integrity Florida says those corporations in Florida were given more public money through government contracts and subsidies than those corporations paid back in state taxes on their profits nationally between 2011 and 2013. And they say that policies that allowed those corporations to take advantage of low corporate profits tax rates, along with large government contracts and subsidies, could be a result of the corporations’ significant lobbying and campaign contributions, including the more than $22 million they spent for those purposes in Florida just between 2012 and 2014.
“The biggest corporations in Florida appear to be getting a major return on investment for their campaign contributions and lobbying,” Krassner said.
The group said one reason they produced the report is that tax cutting for corporations is on the agenda once again for the legislative session that begins Tuesday.
Port Orange Senate Republican Dorothy Hukill is sponsoring SB 138, which will eliminate or reduce the corporate tax liability paid by many businesses throughout Florida by increasing the corporate income subject to taxation from $50,000 to $75,000. “Florida’s businesses can use this tax savings to create jobs, purchase equipment and expand their business,” Hukill said when introducing the legislation. The bill passed 10-1 in the Finance and Taxation Committee this past month.
That’s exactly what Scott proposed back in 2013 and 2014, to no avail. Florida PolitiFact reported that if that cut had gone into effect two years ago, more than 12,000 Florida businesses would become exempt from paying corporate income tax at all, costing the state about $2 billion in revenue.
Among its policy recommendations, the group says lawmakers should consider adopting a state corporate profits tax disclosure act, which could be a large lift, considering that no other state in the country has enacted such a law. Stoneciper said that the Illinois state Senate passed such a measure in 2012, but it didn’t become state law. “At a minimum,” the group writes, “any corporation seeking a government contract or taxpayer-funded subsidy should be required to disclose publicly the organization’s corporate profits tax rate and amount of state and local tax revenue paid during the years the entity receives a government contract.”
Krassner emphasized that Integrity Florida is not taking a position about whether corporate profits taxes are a good or a bad thing. “We’re looking to provide more transparency for the debate about who should pay for Florida, ” he said, adding, “There’s a growing debate about how much Floridians and big corporations should contribute to the schools, and roads, and the needs of our state. Our study sought to provide more disclosure and context for that debate.”