Report: Florida loses more than $1 billion a year in tax loopholes

Associated Press

ST. PETERSBURG, Fla. - Ninety-eight percent of the estimated 1.5 million businesses in Florida paid no corporate income tax last year while a state estimate shows exemptions and loopholes cost Florida $1.2 billion a year in taxes, a newspaper reported Sunday.

A report by the St. Petersburg Times found:

_ Corporate income tax collections as a percentage of state tax revenue are at their lowest point since 1972-73.

_ In 2001, Florida lost a larger percentage of revenue because of questionable tax shelters than all but two of the 45 states that impose a corporate income tax, according to a recent study by the Multistate Tax Commission, a nonpartisan group of state taxing authorities. It found that tax shelters cost Florida more than $500 million in 2001.

_ The system is increasingly inequitable for businesses, with just 5,303 companies paying 98 percent of the tax in 2001.

_ By one state estimate, legal exemptions, credits, deductions and loopholes cost Florida $1.2 billion a year - more than the corporate tax generates.

Florida has a low corporate income tax rate - a flat 5.5 percent of a company's net income in the state. Analysts said businesses have avoided corporate taxes through aggressive tax planning, the help of a state tax code full of loopholes and politicians unwilling to revisit the rules.

"The real explanation is that the corporate tax has become a voluntary tax," said Richard Pomp, a tax professor at the University of Connecticut Law School. "The Legislature doesn't control it. The (state) tax department doesn't control it. Accountants and lawyers control it."

"There's a good side to it," said Jim Zingale, executive director of the Department of Revenue. "We appear to have a strong business climate today that we didn't have in past recessions."

State officials also stressed that many of the zero-paying businesses are small and most pay property, unemployment, sales and use taxes as well as annual filing fees. The companies also employ tens of thousands of Floridians who also pay sales and property taxes.

Businesses said they have a duty to seek any legal way to cut their tax bills and noted that they are simply following the rules set by the state.

"A lot of our shareholders rely on that stock to live their daily lives," said Bob Elek, spokesman for Verizon. "Obviously, we are going to position ourselves the best way we can from a tax perspective."

Sen. Walter "Skip" Campbell, D-Tamarac, chairman of the Senate Finance and Taxation Committee, said he plans to examine corporate income tax loopholes next year but acknowledges tax reform stands little chance. "The Legislature doesn't have the guts to stand up to corporations and say, 'Come on, contribute,'" he said.