MILLER: Rick Scott’s zero-percent tax

OPINION:

Florida Gov. Rick Scott joined fellow state executives for dinner at the White House Sunday night. Before the rib-eye steak or Maryland crab mac & cheese hit the plates, the first-term Republican served President Obama with a letter about corporate taxes.

“I said to President Obama, ’I applaud you for starting the process to reduce the corporate income tax,’ ” Mr. Scott told The Washington Times editorial board on Monday. “And I talked about what we’re doing in Florida to help business: less taxes, less regulation, easier permitting process, less litigation.” The president wasn’t much interested in his pro-growth pitch.

Mr. Scott wants to make the Sunshine State the first in the nation for job creation. To get there, he’s gradually lowering the corporate tax burden to lure companies to move in and expand. At 5.5 percent, the state corporate tax is already below the national average of 6.6 percent, but that’s still too high for Mr. Scott.

“My long-term goal is to completely eliminate the business tax within seven years,” the governor told us. “I want broad-based tax reform so I’m not picking winners and losers.” Florida doesn’t have an income tax for its residents.

In his first year in office, Mr. Scott asked the Republican-controlled legislature to raise the exemption on corporate income from $5,000 to $25,000, relieving almost half of all businesses from paying the tax. Next week, the state House and Senate are expected to pass his request to raise that exemption to $50,000, which would provide a break to 75 percent of businesses.

While exemptions can offer the same dollar amount of savings as a lower tax rate, it’s better to get the tax permanently off the books. The business tax only accounts for 10 percent of the state’s tax revenue, so the governor anticipates his pro-growth policies will make it work. “If I can get the economy growing, then I’ll have plenty of money to continue to reduce that,” he told us.

Mr. Scott is also pushing for a sales-tax exemption for machinery and equipment for manufacturers. The state currently exempts new equipment from sales tax if a company can show a 10 percent increase in output within one year. The governor wants to ease this requirement during these hard economic times by lowering the trigger to 5 percent.

On top of all this, the legislature will take up a constitutional amendment that doubles the exemption for small businesses for the tangible personal-property tax levied by cities and counties. On average, this imposes a 1.7 percent tax on any physical items of value in a business, from machinery to desks. The burden is heaviest on small businesses which lack the resources to track property depreciation and fill out all the paperwork.

Washington could learn a thing or two from this self-made, enormously successful businessman, particularly when it comes to eliminating the biggest barriers to economic recovery. As Mr. Scott explained, “You put more money in business people’s hands, they’ll hire people, they’ll do more marketing, they’ll be more competitive. For me, everything is about jobs. It’s about putting our companies in a position to grow.” That’s exactly what needs to be done at the national level to put America back to work.

Emily Miller is a senior editor for the Opinion pages at The Washington Times.