Florida Taxpayer Independence Day 1999!

Although the deadline for paying your taxes to the IRS was April 15, the average Floridian will not earn enough to pay his or her total tax bill for 1999 until three weeks after that. Thursday, May 6 is Florida Taxpayer Independence Day 1999, estimated by Florida TaxWatch. On that day, Floridians can take satisfaction in knowing they are finally earning money for themselves not the tax collector. This symbolic date assumes that every dollar earned since January 1 goes to pay federal, state and local tax obligations. Although a strong economy has increased the amount of taxes Floridians pay, income has risen a bit more in 1999. So this year it will take a little less time to earn enough to pay your taxes.

Florida Taxpayer Independence Day comes one day earlier than it did the year before. Florida Taxpayer Independence Day fell on May 7 in both 1998 and 1997. This recent trend comes after Floridians' saw Taxpayer Independence Day coming later and later during the 1990s. May 7 was the latest Florida Taxpayer Independence Day. The earliest of the 23 days Florida TaxWatch has calculated was April 12 in 1983. For the average Florida household, paying these taxes in 1999 takes 125 out of 365 days, or more than one-third of the year. However, this is one day less than last year.

The "hold the line" policy on taxes at all three levels of government has led to earlier independence. The federal tax hikes of the early 1990s dramatically increased tax burden. Recently, while Floridians have not been subject to major tax increases, a booming economy has still meant significant increases in tax collections. However, this year, income growth exceeded tax growth. With the total tax burden on the average household increasing 2.8% in 1999, and their income going up 3.8%, it is going to take them a little less time to earn enough to satisfy their tax obligations.

If working 9:00 a.m. to 5:00 p.m., Floridians' Taxpayer Independence Time falls at 11:44 a.m. daily, almost two minutes less than last year. Federal taxes alone take up 1 hour and 52 minutes of the eight hour work day. Add to this state and local tax obligations, and the average Floridian works 2 hours and 44 minutes daily just to pay the tax collector.

Taxes are the single largest expense incurred by citizens (See figure on last page.). By contrast, housing and utility costs take 1 hour and 16 minutes, health and medical care takes 50 minutes, and food requires 41 minutes.

The 1999 Florida Tax Index climbed to 182.0, meaning that all taxes paid by Floridians to federal, state and local governments have grown 82.0% since the base year of FY 1990 (Table 1), an average annual growth of 6.8%. This rise outpaces combined population and inflation growth in Florida of 53.8% (average annual growth of 4.9%).

The index for total per capita taxes (Table 2) is at 153.3, meaning these taxes are up 53% since 1990. This contrasts with inflation of 30% over this time. Each Floridian's tax burden grew 3.3% this year. The FY 1999 taxes for each man, woman and child in Florida are projected at $9,073.

Ten Years of Florida Taxpayer Independence Days Past Taxpayer Independence Days have been revised to reflect changing estimates. All years cited in discussion of Tax Freedom Day are calendar. The Tax Index is on a fiscal year basis. Year Days Date 1999 125 May 6 1998 126 May 7 1997 126 May 7 1996* 124 May 4 1995 121 May 2 1994 120 May 1 1993 118 April 29 1992* 114 April 24 1991 113 April 24 1990 113 April 24 * leap year Source: Florida TaxWatch, May 1999

Florida's FY 1999 total tax bill is estimated at $137.9 billion, more than one-third of its $394.1 billion personal income.

Even with all three levels of government generally avoiding tax increases, Floridians' total tax bill grew 5.1% in FY 1999, a little less than in 1998 (5.3%). Even though this growth of nearly $7 billion is significant, it is the smallest annual percentage increase since 1992. Tax growth slowed considerably in the 1990s. This decade, Floridians' total tax burden has averaged annual growth of 6.8%. In the 1980s average annual growth was 11.4%. This trend is true for all three levels of government. The following is the average annual growth in the 1980s and the 1990s, respectively: local (13.8% and 6.5%); state (11.4% and 7.0%); and federal (11.1% and 6.9%).

Until 1992, the largest growth in taxes for Floridians were coming from local governments. Annual increases of 12%-15% were the rule. This growth has slowed considerably since then, so much so that local government tax growth is smaller than that of both state and federal governments during the 1990s.

Property tax millage rates have remain fairly stable this decade. The 21.88 average millage in 1999 is 1% greater than in 1998, but approximately the same as it was in 1995. Still, growth in new construction and property values will help bring in $1 billion in additional property taxes for local governments in 1999. The Legislature has mandated a $281 million rollback in property taxes for next year.

Taxes paid to counties, cities and special districts are estimated to total $16.4 billion in 1999, or $1,076 per Floridian.

The Florida Legislature has largely been able to avoid tax increases for several years now. In fact, it passed a $1 billion tax reduction for FY 2000. Despite this, the economy's strength has resulted in solid tax growth. Collections are expected to rise 5.2% in FY 1999, following 7.4% in 1998. Sources sensitive to the economy such as sales, corporate income and those tied to the housing and mortgage markets have all benefitted.

State tax collections are projected to rise to $26.6 billion in FY 1999. That amounts to a tax burden of $1,747 per Floridian.

Most of the taxes (69%) Floridians pay go to the federal government. The tax increases of the early 1990s led to rapid tax growth as the economy prospered during the decade. This is why Taxpayer Independence Day came later and later. In 1998 and 1999, federal tax growth is expected to slow, increasing less than 5% in both years. This compares with average growth of 9.3% over the previous five years.

Federal tax collections are projected to rise to $95.0 billion in FY 1999, or $6,249 per Floridian.

With growth in personal income (5.8%) exceeding that of taxes (4.7%) in calendar year 1999, coupled with continued low inflation, Floridians' paychecks should go farther than last year. Florida TaxWatch projects that the average Florida family's effective buying power (EBP) will increase in 1999 for the sixth straight year. Effective buying power is after-tax income adjusted for inflation. The 1999 increase is estimated at 2.1%, the largest increase this decade. These six years of increasing EBP followed a period during which Floridians' buying power fell in four straight years.

After paying all taxes and adjusting for inflation, the average Florida household will have approximately $865 more to spend in 1999 than it had in 1998.

With Florida's total personal income up an estimated 5.8%, the average household brought in 3.8% more than last year.

This was still enough to cover inflation of 2.3%. Tax growth of 2.8% on that same household also ate into this income growth, but not enough to stop the average Florida household from enjoying increased buying power.

Despite the 2.1% increase in 1999, the effective purchasing power of Floridians has risen only 3.0% over the last ten years. Household taxes have outpaced both inflation and personal income since 1989.

Since 1989
Inflation Up	34.7%
Personal Income Up	45.1%
Taxes Up	59.2%

In 1989, the average Florida household earned $46,109. After all taxes were paid, $31,768 was left. In 1999, that household earned an estimated $66,911 but its tax now stands at $22,828, leaving $44,083. When adjusted for inflation, Effective Buying Power is up $962 from 1989, and up $865 from 1998.

This report was researched and written by Kurt Wenner, Senior Research Analyst
under the direction of Dr. Keith G. Baker, Senior Vice President and Chief Operating Officer.
Joseph P. Lacher, Chairman; Dominic M. Calabro, President and Publisher
Daniel E. Sprague, Publications Director and Research Analyst
© Copyright Florida TaxWatch, May 1999

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