Rubio Tax Plan: Who Loses?

The South Florida Sun-Sentinel's Harriet Brackey has a thoughtful piece on who would win--and who would lose-- under the sales-tax-for-property-tax swap that House Speaker Marco Rubio has pushed through the House:

For whom would an increase in sales taxes be a burden? The poor, certainly. Younger people. Those in the work force.

This terse but accurate summary is worth unpacking.

The regressive impact of sales taxes on Florida's tax system is a no brainer, and has been well documented by ITEP in the past. No major tax levied by state or local governments (including the property tax) hits low-income families harder. Shifting further away from property taxes and towards sales taxes would further shift Florida's property tax load onto the very poorest residents of the Sunshine State.

Less obvious is Brackey's assertion that "younger people" would be hit hard, but it makes sense on a moment's reflection. Younger people are, in general, poorer, which means they'll get hit hard by a sales tax hike. And they're less likely to own homes, which means they'll benefit less from homeowner property tax cuts.

Even less obvious, to me was Brackey's assertion that "those in the work force" would get hit hard. But the story makes sense once she tells it:

Frank Williams, an economist for the Florida Legislature's Office of Economic and Demographic Research and co-author of the study, said another important finding of that study was that people who aren't retired pay a greater proportion of their income in sales taxes than retirees. "The burden of retirees was about half that of working families," Williams said. "They don't buy as many taxable goods."

So the question of the day is: how can the House leadership defend a tax cut that shifts the tax load onto young working people? Not very Reaganesque....