New Report Highlights Federal Tax Reform Impacts on Florida
The Florida Department of Revenue (DOR) recently released an examination of the federal Tax Cuts and Jobs Act of 2017’s (TCJA) impact in Florida – a nearly year-long review that was directed by the Florida Legislature. Like many other states, Florida uses federal taxable income as a starting point to determine Florida income for the purposes of corporate income tax. Because of the many changes contained within the TCJA, it is estimated that a full adoption, or “piggyback” of these changes, would increase Florida’s tax base by 13 percent.
DOR identified 14 topics that will have a significant impact on Florida’s corporate income tax. These topics are the same that have been identified in previous status reports and have been brought to DOR through public testimony, including:
- Like-kind exchanges,
- Global Intangible Low-Tax Income (GILTI) and
- Net interest deductions.
The final report includes a full analysis of each topic, including an analysis on the impact to state revenue. The Florida Chamber offered comment in a written letter to the Department of Revenue encouraging Florida to decouple from the GILTI and net interest deduction changes in the TCJA. We will continue to be engaged as the Florida Legislature uses the information from this report to implement federal tax reform changes for state corporate income tax purposes.
Share With Your CFO
Share this important message with your company’s CFO to help ensure they have the latest information on this important issue. For more details, contact Carolyn Johnson at email@example.com or at 850-521-1235 to get involved in our efforts to ensure Florida’s tax climate remains competitive.
Workers’ Comp Rates Decrease 1.8 Percent Next Month
On May 1, the Florida Office of Insurance Regulation approved a law-only filing that decreases workers’ comp rates by 1.8 percent, effective June 1, 2018. This decrease is the result of the federal tax cut package signed into law at the end of last year, the Tax Cuts and Jobs Act, which produced an increase to many carriers’ profit and contingency margins. In response, the National Council on Compensation Insurance filed a corresponding rate decrease to offset the increases to insurance carriers.
What This Means for You
As a result of federal tax reform, job creators will experience lowered costs of doing business in the form of needed workers’ comp rate relief. However, this relief may only be temporary. The result is modest, albeit temporary, rate relief for businesses across the state of Florida.
It is expected that the National Council on Compensation Insurance will file its annual experience filing in late summer, and rate increases could be on the horizon. The fact remains that while businesses across the state have continued to become safer and the severity of claims have decreased, attorney fees remain a cost driver in Florida’s workers’ comp system. Recent data by the Office of Judges of Compensation Claims show that attorney fees increased by 36 percent over the previous year, and hourly attorney fees have jumped by 200 percent.
The experience rate filing expected in late summer will start to reflect some of this new data as a result of the Florida Supreme Court’s 2016 decision in Castellanos v. Next Door Company.
Join the Task Force
We need your help in pushing legislators to enact meaningful and comprehensive workers’ comp reform by addressing skyrocketing attorney fees. Join the Florida Chamber of Commerce’s Workers’ Compensation Task Force by contacting Carolyn Johnson at (850) 521-1235 or firstname.lastname@example.org.
Targeted Tax Reform Will Make Florida More Competitive
A competitive and equitable tax system creates jobs and strengthens the economy. The Florida Realtors® say that while getting there will be a challenge, a business-friendly tax climate can be achieved.
Carrie O’Rourke, Vice President of Public Policy for Florida Realtors®, said the Florida-only business rent tax should be the first piece of legislation to be eliminated before Florida can move forward. With the recent Tax Cuts and Jobs Act, companies are able to invest more in their companies and employees. O’Rourke said the benefits of the tax cuts could bring business to Florida, but the business rent tax could negatively impact those decisions.
“First, let’s get rid of the business rent tax. Not only is that an issue that prevents our businesses from expanding and growing, but it also is a detriment for those companies that are looking to relocate to Florida,” O’Rourke said. “Everyone is aware of what is going on with Amazon and everyone wants an Amazon center in Florida, but it is something to consider and it plays against our ability to receive that.”
According to O’Rourke, both the Florida Chamber of Commerce and Florida Realtors® have been addressing the issue for a several years. Combining efforts has helped create even greater awareness of the problem among legislators.
“I think two years ago we really started to work together with the Florida Chamber in pulling together all of the business associations in Tallahassee to really work together. It was because of this partnership that we were able to get the legislature to understand the importance of this and realize that when you give a dollar back to a business they are not going to spend it, they are going to reinvest it,” O’Rourke said. “Our partnership with the Florida Chamber was absolutely critical. We were able to put some of the right pressure points on to make sure that we at least got the cuts started, which was a .2 percent cut last year and it reflects $60 million statewide.”
The Florida Realtors® used their 2018 Mid-Winter meetings to discuss the business rent tax and other legislative issues that are on the horizon. The three-day event was held in Orlando on Jan. 24-27.
“We were very lucky this year that our mid-winter meetings coincided with session so it was a great time for us to give an update on what our legislative priorities are and where they are in the process,” O’Rouke said. “We were able to focus on what’s happening with the business rent tax, the assignment of benefits bills that are out there, affordable housing and overall protection of private property rights through the vacation rental bill.”
The takeaway, O’Rourke said, was one of optimism. Existing home sales in Florida were up 1.2 percent over 2016 sales levels, and 2017 sales levels of existing condos and townhouses are up about three percent year over year. The statewide median price in both sectors is up about eight percent compared to a year ago.
“Things are looking good for Florida at the moment. I had one member who had a closing every single day from the beginning of the year. Our economy grew in 2017 and that momentum is expected to continue this year,” O’Rourke said. “We’re seeing a slight uptick in prices, but it’s still a competitive market. The only downside we are seeing is inventory, so there are just not enough homes on the market to keep up with the demand.”
O’Rourke said the principles of free enterprise will guide Florida to a more secure and sustainable future.
“A healthy business climate leads to healthy communities and that’s what we are all about,” O’Rourke said. “When businesses are successful, it creates opportunities for employees, their families and so on. Free enterprise is absolutely critical to make sure that all of that is a reality.”