Blog

Nov
22
Florida's Business Tax Climate Wins Accolades

A recent study by the Tax Foundation has named the state of Florida fifth in the nation, for its business tax climate. States with the best tax systems are the most competitive at attracting new businesses and most effective at generating economic and employment growth. That's a fact and it puts Florida in an enviable position. The Tax Foundation takes into account five factors when figuring their rankings—individual income tax, sales tax, corporate tax, property tax and unemployment insurance—and while Florida scored fairly well on all of them, individual income tax was the standout.



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No Individual Income Tax In Florida

The study gives its five factors weighted rankings,* as some factors are considered more important than others. At 32% of the overall grade, individual income tax is by far the most important. Like the other states ranked in the top five, Florida has no individual income tax. This part in the five-way tie for top place was a considerable boost to the state's overall ranking. The Tax Foundation considers this such an important factor because so many small business report their come through individual income tax. This lack of income tax makes Florida an attractive place to live and thus boosts its labor pool.



Florida Improves Significantly On Sales Tax

Sales tax is the second most important factor and overall Florida ranked 12th, which is a fairly significant improvement over last year's 17th place ranking. The general sales tax in Florida is 6%, with counties also having the option of charging a discretionary sales surtax. In Sarasota County, the discretionary tax is 1%, while in Manatee it's 0.5%.



Gov. Pledges To Lower Florida's 5.5% Corporate Income Tax Rate

Corporate income tax is the third factor and it's a subject that has gotten some attention recently in the state, with Gov. Rich Scott, fresh off his re-election, having pledged further reductions in corporate income tax. The corporate tax rate in Florida is currently 5.5% and Florida ranked 14th in the state-by-state comparison. The 5.5% rate was significantly lower than the worst overall rate—Iowa at 12%. Interestingly, three of the four states ahead of Florida in the overall ranking (Wyoming, South Dakota, and Nevada), don't have a corporate income tax at all.



Sarasota Stands Out With Low Property Taxes

The 4th factor in the ranking is property tax, another area where Florida has made significant gains. On this score, Florida was awarded 5.45/10 and was ranked 16th. The state has improved considerably on this factor over the last few years, rising for 24th in 2012. From a local perspective, Sarasota does very well, with one of the lowest property tax rates in the state, according to the Florida for Boomers website.



Florida Ranks 3rd Nationally On Unemployment Insurance

The final factor is Unemployment Insurance taxes. Again Florida scores very highly on this factor, ranking 3rd in the country with a score of 5.97/10. The state does well because its maximum rate--5.4% is the lowest in the nation. The highest rates is 12 % in Arkansas.

With Governor Scott promising $1 billion dollars in tax cuts over the next two years, it will be interesting to watch how Florida fairs in this report over the next few years. The Governor’s promises on property taxes and sales taxes should have an impact on the state's scores and if he succeeds in phasing out the state's corporate income tax as proposed, Florida would be at the top in this important factor as well.



The state's tax climate is certainly one great reason to move to Florida. To find out more, speak to the relocation experts at Coffey & Co. Call 877.308.6311.


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