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Report: Florida Among Most ‘Business Friendly’ States

Florida remains among the top 10 states in the nation when it comes to having “business friendly” taxes, but one leading lawmaker says the high ranking means little if the Sunshine State can’t do better at attracting jobs.

Florida was ranked 5th in the 2010 State Business Tax Climate report put out this week by the Washington D.C. based Tax Foundation. Florida, which has the best ranking among Southern states, has held the same ranking for several years, based largely on the fact that the state constitution prohibits a state income tax.

The conservative-leaning Tax Foundation also looked at property taxes, unemployment taxes, corporate income taxes and sales taxes. Even though the state’s now higher cigarette tax was included in overall sales taxes, it did not change the state’s overall ranking.

Natasha Altamirano, a spokeswoman for the foundation, stressed that the rankings don’t reflect how much money the taxes raise, but how broad and competitive the structure is compared to other states. In fact, the report faults Florida for some of its economic incentives, pointing to the decision by Capital One to close a Tampa-area facility in 2004 even though it received tax breaks from the state. The report states it is a more “effective approach” to “systematically” improve business taxes for the long term.

State Sen. Don Gaetz, R-Niceville and chairman of a Senate select committee on Florida’s economy, isn’t impressed that much by the high ranking, which comes at a time when the state has nearly 1 million people out of work.

“I’m less interested in whether we are 5 or 7 in ranking of a Washington organization,’’ said Gaetz. “I’m more concerned with what we are doing to bring jobs to Florida and keeping jobs in Florida.’’

The state’s stubbornly high unemployment rate could prompt changes to Florida’s ongoing economic development programs. The Senate Commerce committee is already working on a review of the state’s Qualified Target Tax Industry (QTI) tax refund program, which is scheduled to sunset on June 30, 2010 unless lawmakers reenact the program. The program, which first started in 1994, is supposed to target high-wage businesses that either expand existing operations or relocate to Florida.

Gaetz said the select committee is working on an analysis that looks at the top 10 states in the nation at creating jobs and whether there are programs that Florida should enact. He said there is a “significant gap” between those states and Florida and that most economic development programs were designed before the state became a “boom state.”

“In my view, we have to look hard at our tax policy and other economic policies to make sure we are relevant,’’ said Gaetz, who said he wanted his select committee to come up with a “Jobs for Florida” package in time for the 2010 session.

While the Tax Foundation ranked Florida fifth overall on business tax issues, it ranked the state first on individual income taxes, 15th on corporate income taxes, 32nd on sales taxes, third on unemployment insurance taxes and 22 in the nation on property taxes.

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