Corporations in Florida will likely still be able to use subsidiaries to lower their tax burden. An amendment to a House tax cut bill to require combined reporting on corporate income taxes was rejected by Republicans on Tuesday.
The underlying bill (HB 7071) includes myriad tax cuts for consumers, some property owners and businesses. But the main point of debate Tuesday was a proposal from Rep. Angie Nixon, a Jacksonville Democrat, to require companies to file one tax return for all of their businesses, known as “combined reporting.”
That would have been a change from current law, which allows corporations to file separate returns for each franchise or subsidiary, which are often domiciled outside of Florida, allowing them to lower their corporate income tax burden.
“It’s no more complex or burdensome than the current system of separate reporting,” Nixon said. “It will not add uncertainty.”
The vote was 75-39 along party lines, with Republicans against and Democrats in favor. GOP members argued the move was too much of a change to approve without knowing the consequences for businesses.
“It really would pick winners and losers and some businesses would pay more tax and some would pay less,” said Rep. Bobby Payne, a Palatka Republican and sponsor of HB 7071. “At this time it’s a major change in our corporate income tax that I just don’t support.”
Payne and the rest of the House did approve one change, renaming the sales tax holiday for skilled trade tools in the bill the “Tool Time” sales tax holiday. The holiday will be Sept. 3-9 and apply to hand tools, power tools, safety glasses, tool belts, tool boxes, electrical voltage and testing equipment, and LED flashlights, among other items.
Other parts of the bill include a “Freedom Week” holiday, which would run July 1-7 and apply to sports events, movie tickets, museum passes, state park entrance fees, tickets to a ballet, play or musical, gym memberships, and outdoor recreational equipment and pool supplies.
The traditional back-to-school sales tax holiday is also included, exempting sales taxes on clothing, school supplies and personal computers valued at less than $1,500. That holiday would run from July 25 to Aug. 7.
Parents are projected to save $74.6 million during a one-year exemption of sales taxes on baby and toddler clothes in the bill, as well as $35 million for another one-year exemption on diapers.
The bill is slated to get a full House floor vote Wednesday, but the final tax cut package is likely to undergo changes after negotiations with the Senate before heading to Gov. Ron DeSantis’ desk.