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Nikki Fried, the state’s current agriculture commissioner and lone statewide elected Democrat, is seeking the Democratic nomination to run against Republican Gov. Ron DeSantis in 2022.
Fried said that DeSantis signed a “$1 billion tax increase.” That refers to an online sales tax bill that requires consumers to pay the tax even if the seller doesn’t have a store in Florida.
Fried also said DeSantis gave a $500 million tax break to corporations. But that bill was signed by Gov. Rick Scott in 2018. DeSantis denied pleas by Democrats in 2020 to not give the tax break.
Democrat Nikki Fried said Florida has had a history of Republican governors who pass legislation that hurts people’s pocketbooks.
Gov. Ron DeSantis recently "signed a $1 billion tax increase on the people of our state, on our consumers, yet gave a $500 million tax break to our corporations," Fried told WINK TV. "That's not how government is supposed to work. Government is supposed to work for the people."
Fried’s statement criticizing DeSantis for the tax increase has been a familiar talking point. In a video in April, Fried said, "Last night Ron DeSants raised your taxes by over $1 billion. And he did it right before midnight, with no cameras, no one watching." (His press office announced the bill signing in an email at 11:23 p.m.)
The state estimated that its new law changing online sales taxes will generate an extra $1 billion per year, bringing Florida in line with the rest of the country.
Technically, the online sales tax in Florida isn’t new. But practically speaking, it means that Florida online consumers will pay taxes on some purchases they previously didn’t.
The Florida Legislature passed SB 50 along party lines with Republican support. The new law requires out-of-state retailers and marketplace providers with no physical presence in Florida to collect Florida’s sales tax on items delivered to customers in Florida. The rule applies to sellers who generate more than $100,000 in sales in Florida. The bill takes effect July 1.
Florida levies a 6% sales and use tax on the sale of goods. Customers are required to pay the state for the tax owed on their purchase of an untaxed item. But hardly any did, according to a legislative staff analysis.
A 2018 U.S. Supreme Court decision — South Dakota v. Wayfair — paved the way for more states to collect sales taxes on online purchases. The court eliminated the requirement that a seller have a physical presence in a state to collect and remit sales taxes to that state. Following the ruling, states passed new laws to collect taxes on online purchases. Among states that levy statewide sales taxes, Florida was one of the last few states to pass such a law.
"In the vast majority of states, the process of updating sales tax statutes post-Wayfair was noncontroversial, in large part because the tax that is being collected is not a new tax; it’s a tax that was already owed," said Katherine E. Loughead, an analyst at the Tax Foundation.
Business groups including Florida TaxWatch and the Florida Retail Federation had urged state legislators to pass such a law so that it applied equally to businesses operating inside and outside Florida that sell to Florida customers.
The money from the tax will initially go to replenish the state’s unemployment trust fund and then later will go toward reducing the commercial rent tax.
Jared Walczak, a researcher at the Tax Foundation, estimated that the law will cost online shoppers an added $40 to $50 a year, on average.
In 2018 — when Rick Scott was governor — the Florida Legislature set in motion a corporate tax refund following the 2017 passage of the federal Tax Cut and Jobs Act signed by President Donald Trump. That federal law broadened the corporate income tax base by expanding the definition of corporate income while it reduced the corporate income tax rate.
Since Florida uses the federal definition of corporate income as the starting point for the state corporate income tax, the federal changes resulted in additional corporate income flowing through to Florida’s tax base, Loughead said.
If Florida had adopted all the changes in the federal tax bill, it would have increased corporations’ state tax liabilities.
In 2018, the Legislature passed a bill that would lower the corporate income tax rate for one year if net collections in 2018-19 exceeded forecasts by 7%. The bill required that any excess collections be refunded to eligible corporate taxpayers in the spring of 2020. Only about 1% of businesses pay Florida’s corporate income tax.
Back in 2018, the state didn’t know how much money that would add up to — or that Florida would face the economic downturn in 2020 when businesses closed because of the pandemic.
So why does Fried imply that the corporate tax refund is the fault of DeSantis, who took office in 2019?
In the spring of 2020 amid the pandemic, Democrats asked DeSantis to cancel the refunds, estimated at about $543 million, to save the state money.
"Refunding $543 million to corporations is a spending decision, and it’s a bad one at this time," said state Rep. Carlos Guillermo Smith, D-Orlando. "It should not be a priority of the leaders of a state that is worrying about how to pay for teachers, health care and transportation needs as our tax collections disappear."
But DeSantis remained committed to the corporate refund.
"The corporate taxpayers who are entitled to receive these automatic tax refunds under the law have anticipated these refunds and have likely made business decisions around them," DeSantis spokesman Ryan Ash told the Orlando Sentinel in March 2020.
The refunds, issued in April 2020, benefited 19,546 taxpayers, according to a state Department of Revenue spokesperson. The average benefit was $27,793.49.
Fried said DeSantis "signed a $1 billion tax increase on the people of our state, on our consumers, yet gave a $500 million tax break to our corporations."
In April, DeSantis signed an online sales tax law that the state predicts will generate an extra $1 billion a year. Online shoppers were supposed to be paying these taxes if they were not charged, but hardly any did. Florida’s new law puts it in line with other states that have statewide sales taxes.
The tax break refers to a bill the state Legislature passed in 2018, before DeSantis was governor, in response to the federal tax law. The bill resulted in refunding corporate taxes above a certain threshold so that their payments would remain roughly the same. Democrats called for DeSantis to cancel the refund, a request he denied.
Fried’s claims have an element of truth but ignore critical facts that would give a different impression. We rate this statement Mostly False.
WINK TV, How Nikki Fried says she'd have handled pandemic in Florida, June 9, 2021
Nikki Fried, Tweet, April 20, 2021
Florida House, HB 7097 staff final bill analysis, 2020
Florida Senate, Bill analysis and fiscal impact statement on SB 50 and SB 50, 2021
Florida House, HB 7093: Corporate Income Tax, 2018
Gov. Ron DeSantis, Bills signed, April 19, 2021
News Service of Florida, DeSantis signs tax increase on out-of-state online retailers, April 21, 2021
FORBES, As Of July 1, Florida Will Require Online Sellers To Collect 6% Sales Tax From Residents, April 21, 2021
Tallahassee Democrat, Florida's corporations set to pocket $543.2 million tax refund, March 30, 2021
Miami Herald, Florida's online sales tax is now law. So what does this mean when you click 'Buy?' April 24, 2021
Sun Sentinel, What you should know about Florida’s new online sales tax law, April 20, 2021
Sun Sentinel, Just before midnight, DeSantis reveals he's signed $1B sales tax on consumers, April 21, 2021
Florida Phoenix, You’ll pay more for online purchases under legislation quietly signed by Gov. DeSantis, April 20, 2021
AP, Missouri lawmakers vote to collect online sales taxes, May 12, 2021
Sarasota Herald-Tribune, GOP leaders assure big companies of refund on taxes, March 31, 2020
Tax Foundation, South Dakota v. Wayfair, 2018
Florida TaxWatch, E-fairness, 2020
CBS, Florida Online Shoppers To Pay More As Gov. DeSantis Signs Online Sales Tax Bill, April 20, 2021
Email interview, Max Flugrath, Nikki Fried campaign for governor spokesperson, June 10, 2021
Email interview, Christina Pushaw, Gov. Ron DeSantis spokesperson, June 10, 2021
Email interview, Florida Department of Revenue spokespersons Bethany Wester and Will Butler, June 10-11, 2021
Telephone interview, Kurt Wenner, Florida TaxWatch senior vice president of research, June 10, 2021
Telephone interview, Chuck Maniace, vice president of regulatory analysis and design at the tax firm Sovos, June 10, 2021
Email interview, Katherine E. Loughead, senior policy analyst,Tax Foundation, June 10, 2021
Email interview, Jared Walczak, vice president of state projects, Tax Foundation, June 10, 2021
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