As many as 2 million working-class Floridians could see annual rebates of up to $500 in state “consumption taxes” if a South Florida Democrat’s proposed bill gains election-year traction in the state’s Republican-controlled legislature.
Senate Bill 254, pre-filed Sept. 10 by Sen. José Javier Rodríguez, D-Miami, would require the state’s Department of Revenue (DOR) and the Legislature’s Office of Economic & Demographic Research (OEDR) to present lawmakers with ways to expand the federal Earned Income Tax Credit (EITC) that at least 2 million Florida working class families with children receive.
Under SB 254, the DOR would “rebate” in state taxes up to 10 percent of the EITC eligible Florida residents receive in their federal income tax returns – an estimated composite $500 million in “returned” taxpayer money.
SB 254 has been referred to the Senate’s Appropriations, Finance & Tax and Commerce & Tourism committees. The five-member Commerce & Tourism Committee, led by State GOP Committee Chair Sen. Joseph Gruters, R-Sarasota, staged a preliminary workshop discussion on the bill Tuesday.
And Gruters was among those dousing cold water on Rodriguez’s proposal during the workshop, raising concerns about how much it would cost DOR to administer the program and how states that have adopted similar EITC rebates, such as Washington, have to figured out a way to implement it.
DOR Executive Director Jim Zingale told the panel his department would need to significantly boost its resources to process rebate applications for the 2 million Floridians receiving EITCs, an additional 400,000 who qualify but don’t apply, and handle the distribution of $500 million in annual rebates.
Zingale said the proposed methodology for rebating EITC recipients through “consumption,” or sales, taxes is complicated, noting the state rebate lacks a “direct linkage” to a federal tax to “piggyback” because Florida does not have a state income tax to “piggyback” off with.
OEDR Director Amy Baker agreed that establishing and maintaining the proposed EITC rebate program will impose “budget consequences” and “costs to the government structure to administer this.”
Baker said, however, her assessments are solely focused on dollars and cents. Tax-related proposals such as this one require consideration of political factors that are as fundamental to the matter as straightforward economic projections are, she said.
An EITC rebate that could put $500 million more in the hands of 2 million Florida households “can be good for the economy,” Baker said, “but on the other hand, it’s not necessarily good for the state in terms of return on investment.”
After the workshop, Rep. Javi Fernandez, D-Miami, said Democrats will advocate hard to move the bill forward, calling the EITC the “largest anti-poverty program in the country,” worthy of expansion at the state level.
Rodríguez told reporters Tuesday that a new study on expanding the EITC credit is warranted and that, without a state income tax, Florida lawmakers must exhibit some “creativity” in finding ways to return money to taxpayers who would benefit most.
According to the National Council of State Legislatures, at least 29 states have various EITC-linked rebate programs.
House Democrats in Congress are also pondering a 2020 bill to expand the EITC.