In Push to Close State Tax Loopholes, Gov. Rick Scott the Obstacle ...

Gov. Rick Scott could stand in the way of closing Florida?s tax loopholes. (Photo courtesy of Rick Scott.)

By Ashley Lopez
Florida Center for Investigative Reporting

Plans to close tax loopholes in the state might not come to fruition, because a bill that would close those loopholes doesn?t have the expressed support of Gov. Rick Scott.

The Orlando Sentinel has previously reported on how businesses in the state are using these tax loopholes. According to the Sentinel, at least 100 Florida companies are dodging the state?s corporate income tax by creating a subsidiary in a state such as Delaware ? which has no corporate income tax ? and then paying that subsidiary?for the right to use some company resources.

The Sentinel reported that this loophole has allowed Circle K Stores Inc. ?to shield $56 million in profits from Florida?s income tax during a three-year period ? and saved the company as much as $3 million in taxes?:

Hundreds of millions of dollars are at stake. Some corporations have avoided tens of millions of dollars apiece in Florida income taxes, the records show, dwarfing Circle K?s savings.

It all appears legal ? thanks to an apparent ?loophole? in Florida?s corporate-income-tax law that was exposed during a little-noticed lawsuit between Circle K and state tax authorities. And unless the Florida Legislature acts, the judge in that case has ruled, he and others are helpless to stop the practice.

During Scott?s term in office, he has slashed the corporate income tax, benefitting large companies while shrinking revenue for state-run programs.?Last year, the corporate income tax brought in less than $2 billion for the state.

While the GOP-controlled Legislature has resisted seeking out more tax revenue from big companies,?state Rep. Ritch Workman, R-Melbourne, chairman of the House Finance & Tax Subcommittee, says he is committed to closing loopholes that allow companies to dodge Florida?s corporate income tax.

But Workman?s biggest hurdle will be Scott, a wealthy former hospital CEO who has always disliked the tax.

According to the latest from the Sentinel:

Workman said he envisioned a package in which legislation to close various loopholes?would be?paired with some of the new tax breaks the Legislature is advancing this spring, such as the assortment of $60 million subsidies for pro sports that his committee approved yesterday. But Workman said when he discussed that concept with Scott?s office, ?The governor wasn?t excited.?

And Workman said he sees no need to spend committee time working on loophole legislation if it ultimately has no prospect of becoming law.

Workman also said he didn?t want to rush the issue because it would be unfair to suddenly change the rules of the game on businesses, some of whom have been able to avoid tens of millions of dollars apiece?in Florida corporate-income tax by moving their logos and trademarks into an out-of-state subsidiary and then paying royalties to use those items in Florida.

Workman said the subsidiary tax loophole was among those he aims to to close.

Source: http://fcir.org/2013/03/22/in-push-to-close-state-tax-loopholes-gov-rick-scott-the-obstacle/

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