Florida Response to Bonus Depreciation

BNA, 6/18/02

Florida Governor Signs 'Piggyback' Bill to Cut Corporate Tax Collections by $428 Million
TAMPA, Fla.--Florida Gov. Jeb Bush (R) June 7 signed into law a bill (S.B. 18-E) that retroactively adopts provisions of the federal Job Creation and Worker Assistance Act of 2002 (Pub. L. No. 107-147).

The bill--projected to cut the state's collection of corporate income taxes by $262 million in fiscal years 2001-02 and 2002-03, and by $428 million over four years--took effect upon Bush's signature.

S.B. 18-E also updates the Florida Income Tax Code (Chapter 220, Florida Statutes) to include references to the Internal Revenue Code. The changes apply retroactively to Jan. 1.

Bush's action came nine days after he allowed a similar federal tax code "piggyback" measure (H.B. 2028) to become law without his signature (107 DTR H-1, 6/4/02).

Among other things, the federal legislation established a 30 percent depreciation bonus for qualified capital investments by businesses, effective for 36 months for property placed in service after Sept. 10, 2001. President Bush signed the stimulus bill (H.R. 3090) into law in early March (48 DTR GG-1, L-1, 3/12/02).

Democrats Call 'Corporate Welfare.'
Democrats criticized the governor's approval of S.B. 18-E, saying the state could not afford reductions in corporate tax collections during tight budget times.

"This $262 million corporate welfare bill comes at the expense of Florida's public schools. Economists say it will not create jobs or stimulate the economy," Ryan Banfill, communications director for the Florida Democratic Party, said in a written statement. "Apparently, the only job this bill is designed to protect is Jeb Bush's."

While Bush did not comment on the bill, he cited the tax deferrals as part of "Florida's sensible tax structure" on June 5, when he approved the state's $50.4 billion budget.

"The terrorist attacks had a great impact on our tourism and related industries, and that, on top of an already sluggish national economy, forced us to make tough choices last fall," Bush said in a written statement.
"But I am proud that our state is rebounding--as a result we are able to give Florida's public schools a historic $ 1 billion increase, as well as provide increased funding for programs to create a better Florida for future generations."