GOP says that would be a 'disaster for the economy.'
TALLAHASSEE — A tax that Republican Gov. Rick Scott once campaigned on eliminating has emerged as a big dollar, central clash between the candidates fighting to succeed him.
In a move setting him apart from usually tax-averse Florida candidates, Democrat Andrew Gillum has called for a stunning 40 percent increase in Florida’s corporate income tax, which he wants to use to raise $1 billion more for education, including $50,000 minimum starting salaries for teachers.
The Republican Governors Association is now seizing on the idea, ridiculing it in a new TV spot as a “disaster for the economy.” Florida’s biggest business groups also have begun sharpening their attacks.
“National headquarters of companies in this state are focused on this like a laser beam,” said Tom Feeney, a former Republican Florida House speaker and president of Associated Industries of Florida, whose members include some of the state’s biggest companies.
He said Gillum’s proposal has spawned “terror” in board rooms and is fueling business support for Republican gubernatorial nominee Ron DeSantis, who has said little about his economic plans, other than embracing most of the tax-and-regulation-cutting policies advanced by Scott over the past eight years.
“Punishing corporations by taking money out of the pockets of job-creators is going to have a chilling effect on this state’s economy,” Feeney added.
Gillum, though, defends the tax. In a debate last month, he pointed out that Florida’s 5.5 percent tax on corporate income is less than that levied by neighboring Georgia and Alabama.
Gillum also assured that he had no plans to tax “everyday Floridians.”
“Florida cannot be a cheap date and still be the state that is deserving of our children,” said Gillum, who wants to boost the tax to 7.75 percent. “I believe that corporations have to pay their fair share.”
Running openly as a political progressive, Gillum’s corporate tax plan is part of an agenda that defies Florida’s two decades of Republican rule, and includes plans to expand Medicaid, boost the minimum wage to $15-an-hour, and legalize marijuana.
He’s also delivering a sharp rebuke to Scott, who campaigned in 2010 on a pledge that he would phase out the corporate tax.
Still, the Republican-controlled Legislature largely ignored Scott, going along only with raising exemptions that took more than 12,000 smaller businesses off the tax rolls. Lawmakers said they were wary of losing dollars brought in by the tax.
According to the state’s Department of Revenue, there are more than 200,000 businesses that have a corporate tax filing obligation, and the levy brings in $2.2 billion annually. It’s the state’s second biggest source of general revenue dollars, next to the $25 billion raised by the sales tax.
“Florida’s Republicans have had the wrong priorities for years in Tallahassee,” said Geoff Burgan, a Gillum spokesman. “Nearly half our working families say they can’t make ends meet at the end of the month, yet our richest corporations continue to pay very little in corporate income tax.”
But with the Legislature likely to remain Republican-controlled after the November elections, Gillum would face an enormous uphill fight in getting the tax approved — along with the rest of his agenda.
“We definitely don’t see this as just a symbolic move by Gillum,” said Stephen Lawson, a DeSantis spokesman. “It’s very much in keeping with where he’s going in this campaign.”
The Florida Constitution also requires 60 percent approval in both the House and Senate to increase the corporate income tax, making Gillum’s task even harder.
Senate President-designate Bill Galvano, R-Bradenton, said the idea undermines the state’s efforts to restore business confidence that was rattled by the recession. But he added that it is not something he has spent a lot of time worrying about.
“I don’t see this happening,” Galvano said. “I don’t believe Andrew Gillum is going to become governor, and I don’t think this is an issue we’ll be dealing with.”
Galvano added: “Campaign talk is a lot different from reality. We have to deal with reality in the Legislature.”
Still, the tax is emerging as a bold dividing line, with the potential of rallying both supporters and critics.
The Florida Education Association, the state’s largest teachers union, quickly endorsed Gillum after backing second-place finisher Gwen Graham in the Democratic primary.
In making the switch, FEA President Joanne McCall praised Gillum’s $1 billion proposal, saying: “For too long, Republicans have chronically underfunded our public schools and criminally underpaid our teachers.”
The Florida Chamber of Commerce poured $100,000 into DeSantis’s campaign through a political committee soon after he won the Aug. 28 Republican primary, and is now stepping-up warnings against the tax plan.
Edie Ousley, a Chamber spokeswoman, said that if Gillum’s proposal took effect, Florida would not only have the highest corporate tax rate in the Southeast – it would top New York’s.
“How would that make Florida competitive?” Ousley said. “How would that grow jobs for our kids and grandkids?... It’s a failed approach that sounds popular as a talking point to rally votes, but in reality, it hurts the very voters the talking point panders to.”
The clash over the corporate income tax has echoes in its origins.
When Democratic Gov. Reubin Askew convinced voters to approve taxing corporations in 1971, he stumped the state with a pair of Sears shirts, one bought in Florida and the other in Georgia, which already had the tax.
Askew pointed out the Georgia shirt actually cost less, arguing against business claims that companies would pass the added cost onto consumers.
For his tax and open government reforms, Askew is now considered one of Florida’s most transformational governors. Gillum, Florida’s first black nominee for governor from a major party, also is campaigning for big change.
Associated Industries helped lead the fight against Askew in 1971 and now Feeney, the group's president, says it is time to sound alarms about what a Gillum victory could mean.
“When you have someone with proposals that others in the Legislature just won’t go along with, it becomes a death match. We’d be in for years of misery in Tallahassee,” Feeney said.