‘Freedom Summer’ falls short. But this tax rebate would put $200 million in Floridians’ wallets
Miami Herald Op-Ed
By Esteban Leonardo Santis, Anaruth Solace and Chris Moreno
This article originally appeared in the Miami Herald on August 25, 2023.
Esteban Leonardo Santis (left) is a public policy analyst at the nonpartisan Florida Policy Institute. Anaruth Solache (center) is policy and advocacy manager for Catalyst Miami. Chris Moreno (right) is the financial capability director at Catalyst Miami where he oversees all asset-building initiatives.
What is Florida’s "Freedom Summer" to the 51% of Miami-Dade households struggling to make ends meet? Or the almost 63% of all children in Miami-Dade who live in households just one emergency away from plunging into poverty? Amid sky-high housing and grocery costs, the latest “freedom” sales-tax holiday fails to meaningfully impact those who need it most.
This year’s Freedom Summer marks a substantial three-month expansion of the previous Freedom Week sales tax holidays enacted in fiscal years 2021-22 and 2022-23. The new holiday, which ends this Labor Day weekend, offers a sales-tax exemption on the purchase of tickets for music, sporting and cultural events, movies, museums, state parks and fitness facilities. Freedom Summer also exempts supplies for boating and water activities, camping, fishing and residential pools. Altogether, the state will forfeit $230 million in exchange for these temporary exemptions.
However, the majority of the savings generated from Freedom Summer will primarily favor individuals who already have the means to afford the diverse range of activities, supplies and events that are temporarily sales-tax exempt. This is not surprising. In practice, sales-tax holidays are an ineffective substitute for real sales-tax reform and do not benefit those who need it most in the long term.
Florida’s heavy dependence on the sales tax places the heaviest burden on families and workers with moderate to low incomes, particularly those in Miami-Dade where a staggering 43% of households earn less than $50,000 annually. Florida’s tax code is one of the most regressive in the United States. This means that Floridians who are paid lower wages end up spending more of it on taxes than those with high income. As a result, those who need tax relief the most bear the heaviest tax burden.
Although policymakers are right to advocate for sale-tax relief, the usual short-term sales tax holiday, like Freedom Summer, leaves Florida’s inequitable tax code unchanged. Tax relief must target those who can most benefit from it, it must be long-lasting and it must reform Florida’s tax code at the root. There are better options.
For example, instead of a month-long gas-tax holiday, the governor’s year-long toll-rebate program is a much better targeted and impactful option: As Florida’s Department of Transportation notes, the program will benefit approximately 1.2 million drivers, save the average commuter $400 in 2023 and return $500 million to Floridians. The governor recently reported that the program has saved customers more than $227 million since it launched.
Similarly, a rebate program to offset the state’s sales-tax burden would help boost household income for millions of Floridians.
In 2022, state policymakers had an incredible opportunity to create the Working Floridians Tax Rebate (WFTR), a statewide rebate program that works hand in hand with the federal Earned Income Tax Credit (EITC).
The federal EITC is a common-sense tax break that helps people with low incomes make ends meet, benefiting their families, communities and local economies. Overall, the EITC is one of the nation’s most effective tools for reducing poverty and countering income inequality. To further build on the success of the federal EITC, 31 states, Washington, D.C., and Puerto Rico, have enacted their own versions of the EITC. The Working Floridians Tax Rebate would boost the EITC and, in Miami-Dade, the rebate would benefit more than 400,000 households and put $192 million back in people’s pockets, with an estimated average rebate of nearly $500.
Unfortunately, the 2022 proposal died in committee, meaning that policymakers neither voted nor considered the bill.
The Legislature has made some progress in addressing the unfairness of Florida’s tax code. They have successfully passed permanent exemptions for essential items like baby and toddler products, oral hygiene products and adult incontinence products. Undoubtedly, these long-term measures will significantly benefit households and families throughout the state, providing them with increased opportunities to take advantage of the exemptions on essential goods.
As lawmakers prepare for the 2024 legislative session, they should seriously consider the WFTR program as the next step toward achieving shared prosperity, rather than relying on additional sales tax holidays.
By Esteban Leonardo Santis, Anaruth Solace and Chris Moreno
This article originally appeared in the Miami Herald on August 25, 2023.
Esteban Leonardo Santis (left) is a public policy analyst at the nonpartisan Florida Policy Institute. Anaruth Solache (center) is policy and advocacy manager for Catalyst Miami. Chris Moreno (right) is the financial capability director at Catalyst Miami where he oversees all asset-building initiatives.
What is Florida’s "Freedom Summer" to the 51% of Miami-Dade households struggling to make ends meet? Or the almost 63% of all children in Miami-Dade who live in households just one emergency away from plunging into poverty? Amid sky-high housing and grocery costs, the latest “freedom” sales-tax holiday fails to meaningfully impact those who need it most.
This year’s Freedom Summer marks a substantial three-month expansion of the previous Freedom Week sales tax holidays enacted in fiscal years 2021-22 and 2022-23. The new holiday, which ends this Labor Day weekend, offers a sales-tax exemption on the purchase of tickets for music, sporting and cultural events, movies, museums, state parks and fitness facilities. Freedom Summer also exempts supplies for boating and water activities, camping, fishing and residential pools. Altogether, the state will forfeit $230 million in exchange for these temporary exemptions.
However, the majority of the savings generated from Freedom Summer will primarily favor individuals who already have the means to afford the diverse range of activities, supplies and events that are temporarily sales-tax exempt. This is not surprising. In practice, sales-tax holidays are an ineffective substitute for real sales-tax reform and do not benefit those who need it most in the long term.
Florida’s heavy dependence on the sales tax places the heaviest burden on families and workers with moderate to low incomes, particularly those in Miami-Dade where a staggering 43% of households earn less than $50,000 annually. Florida’s tax code is one of the most regressive in the United States. This means that Floridians who are paid lower wages end up spending more of it on taxes than those with high income. As a result, those who need tax relief the most bear the heaviest tax burden.
Although policymakers are right to advocate for sale-tax relief, the usual short-term sales tax holiday, like Freedom Summer, leaves Florida’s inequitable tax code unchanged. Tax relief must target those who can most benefit from it, it must be long-lasting and it must reform Florida’s tax code at the root. There are better options.
For example, instead of a month-long gas-tax holiday, the governor’s year-long toll-rebate program is a much better targeted and impactful option: As Florida’s Department of Transportation notes, the program will benefit approximately 1.2 million drivers, save the average commuter $400 in 2023 and return $500 million to Floridians. The governor recently reported that the program has saved customers more than $227 million since it launched.
Similarly, a rebate program to offset the state’s sales-tax burden would help boost household income for millions of Floridians.
In 2022, state policymakers had an incredible opportunity to create the Working Floridians Tax Rebate (WFTR), a statewide rebate program that works hand in hand with the federal Earned Income Tax Credit (EITC).
The federal EITC is a common-sense tax break that helps people with low incomes make ends meet, benefiting their families, communities and local economies. Overall, the EITC is one of the nation’s most effective tools for reducing poverty and countering income inequality. To further build on the success of the federal EITC, 31 states, Washington, D.C., and Puerto Rico, have enacted their own versions of the EITC. The Working Floridians Tax Rebate would boost the EITC and, in Miami-Dade, the rebate would benefit more than 400,000 households and put $192 million back in people’s pockets, with an estimated average rebate of nearly $500.
Unfortunately, the 2022 proposal died in committee, meaning that policymakers neither voted nor considered the bill.
The Legislature has made some progress in addressing the unfairness of Florida’s tax code. They have successfully passed permanent exemptions for essential items like baby and toddler products, oral hygiene products and adult incontinence products. Undoubtedly, these long-term measures will significantly benefit households and families throughout the state, providing them with increased opportunities to take advantage of the exemptions on essential goods.
As lawmakers prepare for the 2024 legislative session, they should seriously consider the WFTR program as the next step toward achieving shared prosperity, rather than relying on additional sales tax holidays.
