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Pending Property Tax Revisions on the Ballot for January 2008

Martin County Democrats

The Martin County Democrats recommend voting NO on this proposal.


The New Amendment - Facts and Observations

by Bill Ramos


The current SOH or "Save Our Homes" amendment currently caps property tax increases for Homesteaded property at 3% (or the cost of living) but it does not allow for taking your property tax savings with you from one house to the next (portability).

By adding portability, the new property tax amendment will be challenged in court and is expected to lose that challenge. If that happens, the SOH cap and any hoped for portability on assessed value would be gone and every homeowner could see his or her taxes increase dramatically.

A Yes vote to this Property Tax revision will begin a legal nightmare that will only benefit the attorneys and help to bog down our legal system even worse that it is.

A No vote will allow for a more balanced and carefully thought out solution to be presented for a November 2008 vote.

Following is a summary of the pending changes as well as the reasoning for the expected challenges to come.


Homestead Exemptions:
The current $25,000 exemption from all taxes remains in effect.

There is no exemption for the second $25,000 or the value between $25,000 and $50,000

* An additional, new $25,000 exemption is created for the value between $50,000 and $75,000 but that portion is not exempt from school taxes. The end result is an average savings of $240.00 per homesteaded property.

Portability -

If upsizing:

$350,000 = Current market value.

$150,000 = SOH assessed value.

$200,000 = Protected "Portable" value.

$500,000 = New home market value.

- $200,000 = Deduction for "Portable" value.

= $300,000 Taxable value

- $50,000 = "New" Homestead Exemption.

- $250,000 = New total deduction.

$250,000 = New taxable value.

* $275,000 for school purposes.

If downsizing:

Instead of dollars, you take a percentage equal to the percentage of your old savings.

$350,000 = Current market value.

$150,000 = SOH assessed value.

$200,000 = Protected "Portable"value.

$200,000 = 57% of $350,000, the current homes value

$200,000 = New homes market value

- 57% = Percentage value of savings from old home

$86,000 = New homes assessable value

-$50,000 = New SOH exemption is then deducted

$36,000 = Taxable assessed value of new home.

* $61,000 For school purposes.

Non-homesteaded property tax cap:

Similar to Save Our Homes, this cap limits the assessed increases of commercial, rental and second home property taxes to a maximum amount of 10 percent per year starting in 2009.

Tangible personal property exemption:

Under the amendment, the Tangible Personal Property (TPP) exemption for businesses is $25,000. The Legislature estimates that this tax - paid to local governments on items such as shelving, desks, computers, and other office equipment - will exempt about 1 million of Florida's 1.2 million businesses that currently pay it. The amendment also drops the requirement to file for the TPP tax.

Inherent failure of the proposed Property tax revision due to Constitutionality Issues:

According to the legal analysis in a study by University of Georgia law professor Walter Hellerstein, portability will trigger lawsuits arguing its constitutionality. This study was funded by our Legislature and will be officially presented, along with other studies on portability, on Feb. 15.

According to that report, there are two provisions of the U.S. Constitution that could be used to overturn Save Our Homes portability.

The Commerce Clause, which says states must not discriminate against interstate commerce is expected to be accepted by a federal court as a legitimate challenge to portability on the basis that it discriminates against out-of-state homebuyers in Florida.

Quoting from the report by Hellerstein - "The evidence might demonstrate that the portability provisions effectively imposed a higher cost on interstate than on [many] intrastate relocations; that individual decisions about whether to relocate in Florida were adversely affected by such costs, thereby affecting interstate labor mobility; that businesses were deterred from relocating to Florida due to the increased costs associated with relocating their employees to the state; and that there were nondiscriminatory alternatives for achieving the ostensible purpose of the portability provision."

In simple language this means that people "relocating" into Florida would not have the same privilege of bringing their lower taxes with them. If a company wants to relocate to Florida and its employees don't get economic equality, the company would lose a lot of those employees and that would block that company from relocating.

In addition, there are many Constitutional right to travel precedents that don't let states deprive new residents of governmental benefits granted to longtime residents.

In that same report by Hellerstein, among the examples they point to is the case of Saenz v. Roe - a 1999 case in which the Supreme Court invalidated a California law restricting welfare benefits to first-year state residents. California tried to treat new residents differently that current residents. This ruling could be used to argue against Save Our Homes portability.

Under portability, long-term residents would be treated differently than new residents to the state. Again quoting the report, "In our view, the right to travel and, in particular, the U.S. Supreme Court precedents invalidating state efforts to deprive newly arrived residents of the same governmental benefits that are available to long-time residents provide the most powerful constitutional basis for challenging the Save Our Homes portability provisions."

If Save Our Homes portability is enacted and then found unconstitutional, it would trigger years of litigation over whether Florida should retroactively award tax breaks to out-of-state buyers or tax in-state buyers who took advantage of portability, the report said.

Two justifications for a constitutional challenge to portability are:

1st Amendment -

"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances".

Trigger to a constitutional challenge - The right to assemble would be denied on economic grounds

14th Amendment
Section 1.

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Trigger to a constitutional challenge - Economically preferential treatment for current residents over new residents creates a situation in which there are 2 classes of citizens

The report by Hellerstein is due February 15, 2008: http://edr.state.fl.us/property%20tax%20study/Ad%20Valorem%20iterim%20report.pdf

The Florida Taxation and Budget Reform Commission is a bipartisan commission that meets once every 20 years. During 2007 they've been meeting and preparing recommendations to the state for consideration later in 2008.

By voting now, if this proposal is approved, we lose the benefit of the knowledge in the Hellerstein report and the recommendations of the Florida Taxation and Budget Reform Commission.

In today's news - A recent class-action lawsuit claims state tax laws pit recent Florida home buyers against long-time residents and aims to force local and state governments to return four years of property tax collections.

The lawsuit also anticipates challenges against the proposed constitutional amendment on the Jan. 29 ballot, saying that if the amendment is approved, it will make Florida's Save Our Homes protections even more "skewed and disparate."

The suit was filed in Leon County Circuit Court in November by four Florida homeowners who started paying taxes on a homestead within the past four years. The four-year time frame aligns with the statute of limitations for tax issues, plaintiff attorney William C. Owen said.

 

Over the past 10+ years our legislature has allowed certain tax cuts and tax exemptions that have benefited the wealthiest few at the expense of the voters of our state.  The end result has been to shift the burden of paying the states "bills" onto the working men and women of our state.

Higher taxes force business owners to charge more or relocate and take the jobs they offer with them in order to survive.

Owners of multiple properties who can provide affordable rental housing are forced to charge higher rents that eventually lead to the disappearance of that affordable housing. 

Taxes in Florida can not be allowed to continue to climb and the burden can no longer be shifted to the working men, women and small business owners who built our state and nation.

My Solution

As a candidate for State Representative I have given much thought to this and believe I can offer a fair, workable solutions. To see my proposals, go to my website at www.billramos.com to learn more.
Bill Ramos, Candidate for State Representative, District 81

 


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