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Let's break down Amendment 3. The average Florida home value is about $375,000, and the current exemption amount is $50,000. It's my understanding that the tax rate is approximately $750 for each $50,000 in value, so as it stands the average taxpayer would pay $4,875 per year on the average home. If the bill passes, full implementation would reduce this amount to $1,875. A 61% decrease in property taxes for the average homeowner does not seem fiscally responsible, especially since the bill also caps annual increases on non-homestead property at 5%, down from 10%. I honestly don't see how local governments can handle that kind of decrease, and there's no mechanism in place to replace the funding.
Landlords can't claim a homestead exemption, so this wouldn't affect renters at all.
Florida seems to collect those property taxes and then disburse them back to the local governments. The state itself seems to be doing very well, fiscally. $3.8bn budget surplus, paying off debt ahead of schedule, well funded Rainy Day Fund. They also seem to get most property tax revenue from rental properties and second homes, which don't get the homestead exemption.
Might be they actually can just eat the loss in revenue to reward the people who actually live there. Perks of a competent government.
For long-term rentals, this presumably does get passed on as increased rent. It could be acceptable policy, I suppose, but I would describe that as "actually live there" too. Perhaps the incentive here to buy a home is fine, but worth considering directly.
Passing it on to Airbnbs sounds fine, though.
Econ 101 says that roughly 100% of property tax on improvements should be passed on in market rents, and roughly 0% of property tax on land. Econ 201 says that the actual pass-through is even less than that because the owners of houses built under a low-improvement-tax regime eat a loss.
My understanding of the empirical work on this question is that the theory is right for prices advertised to new tenants, but landlords and good long-term tenants generally renew leases with below-market rent increases, and that the size of the "loyalty discount" is lower when landlord costs (including property taxes) are rising. My personal experience as a market-rate tenant in my 20's is consistent with this.
I think Econ 101 would say that in the short term 0% of changing property taxes gets passed on to renters. You have X supply of houses and Y willingness to pay for housing by renters demand equation.
In the long-term new construction of rentals depends on a market required rate of return to develop new properties. Higher taxes reduces the profit on new construction so you get less new construction.
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If Florida works like most states, taxing jurisdictions work out how much they want to raise, and then convert it into a millage rate. My gut feeling is that the null hypothesis should be that the total amount of property tax will stay the same and the millage rate will increase to compensate for the reduced base - not that millage rates will stay constant and spending be cut.
That would make the amendment a cleanish transfer from businesses, landlords and owners of expensive homes to owners of cheap homes - which you would expect to be popular. That said, supporters and opponents of the amendment seem to be campaigning as if it is a tax cut.
I misread the bill and thought that would be blocked: It's assessment increases that are capped at 5% per year, but that capped value can be taxed at any rate. That seems quite plausible.
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