We recently prepared a comprehensive report of 15 States with the Lowest Tax Burden in the US. Click to see the free report.
But the interesting question to answer is: Is Florida really the State with the Lowest Tax Burden In the US?
Florida
State Tax Burden: 6.91%
Income Tax: 0%
Sales Tax: 6%
Property Tax: 0.91%
Florida is one of those eight states that does not have a personal income tax. The state also does not assess an estate tax or an inheritance tax. Florida has one of the lowest state property taxes, 0.91%, paid as a percentage of owner-occupied housing value. Florida’s corporate income tax of 5.50% is slightly lower than the average corporate income tax among all the states, which lies around 5.80%. Florida’s corporate income tax is imposed on all corporations conducting business, obtaining income, or existing in Florida. A corporation doing business outside the state may apportion its total income. A three-factor formula is used to apportion the total income including a weighted average, assigning 25% each to factors for property and payroll, and 50% to sales.
The state sales tax is 6%, excluding a 1.002% local sales tax rate, which makes an average combined state and local sales tax rate of 7.002%. The state sales tax is levied on the sale or rental of goods and services.
Why did Ken Griffin Move to Florida, Was it Because of Taxes?
According to data from the US Census Bureau, the US recorded around 447,449 new applications filed between January 2023 and January 2024. Out of those 447,449 new applications, 56,882 were filed in Florida, an increase of almost 8.6% year-over-year. In recent years, many corporations have migrated to Florida. According to data compiled by FDI Intelligence, 89 companies relocated to Florida between 2019 and 2023. Jacksonville, Tampa, and Miami are the three major cities in Florida with the highest company headquarters relocations. Following the move of Ken Griffin, Citadel’s billionaire founder, to Miami, Florida gained a lot of attention. Ken Griffin pointed out that his move to Miami was not because of low taxes, it was rather the state’s environment and economic conditions. As reported by Fortune, Griffin in a conversation with Francis Suarez, Miami’s Republican mayor, said:
“It’s gonna get me thrown out of here, but taxes weren’t part of our decision to come to Florida. When you’ve got great schools, a great environment and your streets are safe and clean, that’s when you’ve got a place you want to live in and call home.”
Ken Griffin’s move to Florida is part of a larger contingent of multibillion-dollar investors including Dan Och, Dan Sundheim, and Josh Harris who moved to Florida during the pandemic. Dan Och is the founder of capital management firm Och-Ziff Capital Management, Dan Sundheim is the founder and chief investment officer of D1 Capital Partners, and Josh Harris is a co-founder of Apollo Global Management, Inc. (NYSE:APO). Other major companies that have moved to Florida recently include AerCap Holdings N.V. (NYSE:AER), an American-Irish aviation leasing firm, and Tecnoglass Inc. (NYSE:TGLS), a leading producer of high-end aluminum and vinyl windows and architectural glass.
On May 1, AerCap Holdings N.V. (NYSE:AER) reported the earnings for the first quarter of 2024. The company posted earnings per share of $3.29, beating consensus estimates by $0.90. AerCap Holdings N.V.’s (NYSE:AER) revenue was recorded at around $2.02 billion, surpassing estimates by $71.55 million. Here are some of the comments from AerCap Holdings N.V.’s (NYSE:AER) Q1 2024 earnings call:
“During the first quarter, we generated $3.29 of adjusted earnings per share, up 40% over last year and adjusted net income of $658 million. Importantly, we continued our consistent increases in book value per share, which was up 27% year-on-year to $87.47. As a result of this strong first quarter performance and the improving outlook, we are increasing our full-year 2024 guidance to approximately $9.20 per share.”
GagliardiImages/Shutterstock.com
Florida’s Tourism Economy and Tax Revenue?
Florida attracts tourists from the region and all over the world each year, which adds to its tax revenue. According to VISIT FLORIDA, a state database, almost 140.62 million people visited Florida in 2023, an increase of 2.3% from 2022 and 7.3% from 2019. During the first quarter of 2024, around 40.60 million people have already visited the state, which is 1.2% higher than the first quarter of 2023. Florida had a positive ROI of 0.58 between 2019 and 2022, which shows on every dollar spent by the state of Florida it received $0.58 back in tax revenue, as per the report from VISIT FLORIDA.
On January 24, the Florida Policy Institute reported that the state’s Executive Office of the Governor is working on a new tax proposal that includes new tax expenditures including tax credits, deductions, refunds, and exemptions, collectively addressed as ‘silent spending.’ The new tax expenditures will potentially cover the property insurance and flood insurance premiums, costing approximately $150 million annually. In addition, Florida’s government expects its total tax collections to increase from $45.7 billion in fiscal year 2023-24 to $46.7 billion in fiscal year 2024-25. The state relies heavily on its general sales tax to balance its budget. The governor projects the state’s general sales tax to generate $1,569 per capita in FY 2024-25.
Is Florida the State with the Lowest Tax Burden?
Florida is one of the states with the lowest tax burdens, however, it ranks sixth on Insider Monkey’s list. You can go and see our comprehensive report on all the states with the lowest tax burden in the US.
Click to see The Top 15 States that has the Lowest Tax Burden in the US in 2024.
Disclosure: No positions. This article is originally published at Insider Monkey.