PRESS RELEASE April 24, 2002

Tallahassee -- Florida lawmakers must decide whether to trade short term losses to state coffers for the long-term benefits of economic stimulation. A new briefing from Florida TaxWatch takes a look at the potential impact of changing the state corporate income tax code to keep it consistent with the federal code, and concludes the move would be costly, but necessary.

The Florida Legislature routinely passes a bill to "piggyback" Florida's corporate tax code and pick up any federal changes to make it easier for businesses to comply with the tax. But this is an instance where piggybacking will have a significant negative impact on state tax collections in an already challenging budgetary environment. Extending the new federal tax deferrals to state taxation would decrease state revenues by more than $126 million in 2002.

"While the revenue loss is significant, Floridians will not realize the full benefits of the federal economic stimulus bill if the federal tax relief is not paired with state tax relief," said Dominic M. Calabro, President of Florida TaxWatch. "The tax deferral is necessary to allow Florida to maintain a competitive climate."

If Florida does not "piggyback" with the federal changes, businesses would have to keep two sets of books while tracking two different tax systems. Piggybacking keeps things consistent for businesses, and allows for better auditing by the state through federal audits. The last time Florida did not piggyback was in 1981, more than 20 years ago.

"By piggybacking, Florida can provide businesses with additional incentive to increase investment - giving the economy a boost that will help the citizens of both our state and the nation," Calabro said. "We urge lawmakers to find ways to plug the short-term General Revenue hole by implementing constructive cost savings and budget cuts, while maintaining focus on the long-term benefits of tax relief."