Matt Caldwell: The smartest tax cut Florida can make

Property taxes can essentially be viewed as a form of land rent. This is an undeniable reality.

Gov. Ron DeSantis is correct in stating that as long as property taxes exist, actual ownership of property is questionable. This understanding is precisely why Florida’s forefathers established the original homestead exemption during the hardships of the Great Depression.

Reforming the homestead exemption is one of three key priorities for tax reform that must take precedence.

This reform will require a constitutional amendment, which we can delve into further later.

The second priority for future exploration is local government accountability, particularly regarding the duplication of services and the distinction between general revenue taxes and service-related taxes.

However, the third priority, which we will focus on here, is the most straightforward to address in the 2026 Session. It does not necessitate a constitutional amendment and avoids the contentious issues surrounding local government. Therefore, the first priority for property tax reform should be the repeal of the statewide school tax, known as the Required Local Effort (RLE).

The RLE is an outdated remnant of 20th-century education bureaucracy that no longer aligns with the realities of empowering students and parents.

This nearly $11 billion burden is not subject to the second homestead benefit, is exempt from the 10% cap on non-homestead properties, and bypasses the rollback process. Its nature is so distinct from other tax lines that it raises questions about its legal validity. According to Section 1(a), Article VII of the Florida Constitution, “… No state ad valorem taxes shall be levied upon real estate or tangible personal property …”

So, how can the RLE be considered legal?

While local school boards technically “adopt” their RLE millage, they have little real authority in the process; the state budget mandates an RLE amount each year, which the Department of Revenue allocates based on a convoluted formula, resulting in a millage that is simply passed to districts for adoption.

There are no genuine hearings or considerations for rollback rates — just a straightforward bill with “pay now” stamped on it.

That certainly resembles a “state ad valorem tax.”

Long-time observers of Florida politics will remember that then-Speaker Marco Rubio tried to replace this tax with a sales tax swap during a budget of $66 billion amid the Great Recession.

Now, sixteen years later, with a $116 billion budget, we don’t need to get bogged down in calculations for sales tax increases; we can phase out this tax in the same way the state reduced the commercial rent tax over the last decade.

The first step should be capping the RLE at $10 billion (an immediate reduction from the current figure) and committing to never exceeding that amount. Then, we should decrease it by $1 billion each year over the next ten years. This single line item represents 25% of total property tax collections statewide, and phasing it out does not require a constitutional amendment; it’s a straightforward solution.

No other property tax reform can achieve such a significant impact with relatively low political resistance.

As we approach the next Legislative Session, I urge caution against acting hastily.

Anyone who has undertaken a home renovation knows how tempting the demolition phase can be, yet the actual renovations demand careful, diligent work. For instance, proposals for complete property tax repeal may seem appealing for improving affordability, but those who understand economics recognize that home prices could soar as demand surges for an asset with no carrying costs.

We must be careful not to create more problems than we solve. In my experience, simpler solutions are often more effective. Therefore, if the Legislature aims to provide genuine relief today, the most straightforward approach is to repeal the RLE.

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Matt Caldwell currently serves as the elected Lee County Property Appraiser and served in the Florida House of Representatives from 2010 to 2018.