Taxes

The Florida house of representatives approved a ballot measure for this year’s election. The proposal would allow voters to approve an elimination of all non-school property taxes for homestead property. Sixty percent of those voting would need to approve it, then it would become part of the state Constitution. This proposal still needs to be approved by the state Senate in order to make it on the ballot, and it will have a much harder battle there, because the Democrats are absolutely opposed to it.

You will recall from my post of a couple of years ago:

In Florida, the tax assessor decides what the “fair market value” of your house is. The taxable value is then calculated by taking the market value and subtracting your homestead exemption. In order to have a homestead exemption, the owner of the property must live there as their primary residence. In other words, commercial and rental property doesn’t get a homestead exemption. The taxable value is then subject to being taxed. If you want more detail on how all of this works, click on this link to my previous post.

There are also numerous carve-outs for various groups.

• The homestead exemption is $25,000 on the first $50k of value, then another $25,000 for the next $50k of value, but that second $25k is only for non-school taxes.
• Additional exemption for residents 65 or older who make less than $38,686 per year
• Total exemption for totally and permanently disabled veterans, surviving spouses, or first responders.
• No property taxes for  active-duty personnel deployed outside the U.S.

The result of all of this is many people already don’t pay taxes. In my town, there are 1,000 homes total. Two neighborhoods were recently built in the town- my own, and one other. Those two communities have 200 homes in them, so 20% of the town’s homes. Those homes pay more than 50% of the town’s taxes. Many homes in the town, including those of three of the five city commissioners, pay no taxes at all.

As a result, taxes are very tilted. Renters pay more than owners (because landlords don’t get tax exemptions). Those who have lived in their homes for a long time don’t pay any (or very little) in taxes.

The left is pissed about this. They are all singing the same song- claiming that this is a tax break for so-called “boomers” because GenZ doesn’t own houses. Isn’t it odd that the left constantly wants corporations to pay taxes, but they finally understand that companies don’t pay taxes- instead, they treat taxes like any other expense, and pass those expenses on to the consumer.

The left claims that property taxes are essential for things like police and fire, but ignore that overall, ad valorum taxes are only 18% of local tax revenues. Still they claim the following would be affected, but are lying:

• Law enforcement
• Social services
• Parks
• Environmental programs
• Fire districts
• Emergency medical services
• Schools
• Roads

Law enforcement, fire, EMS, and police are specifically mentioned in the law and will have required funding. School taxes are exempt. What this leaves is Social services (giveaways), Parks and environmental programs (luxury items), and roads (already funded by gasoline taxes and tolls). What the left is upset about is the funding for things like learing centers and other graft that permits them to hand out money to their wealthy well connected patrons.

The Senate session ends March 13. The odds that this gets passed before then are long. It probably won’t happen.

The story is titled Denmark’s generous child care and parental leave policies erase 80% of the ‘motherhood penalty’ for working moms. The story begins with this premise: motherhood tends to depress women’s wages, something social scientists call the “motherhood penalty.”

Then it goes on to point out Denmark policies intended to help mothers stay full time employed.

• subsidized child care is available for all children from 6 months of age until they can attend elementary school. Parents pay no more than 25% of its cost.
• payments made to parents of children under 18. These benefits are sometimes called a “child allowance.”
• housing allowances, that are available to all Danes, but are more generous for parents with children living at home.
• In the year they first gave birth to or adopted a child, women received over $7,000 more from the government than if they had remained childless. 
• the Danish government offset about 80% of the motherhood earnings penalty for the women we studied. While mothers lost about $120,000 in earnings compared with childless women over the two decades after becoming a mother, they gained about $100,000 in government benefits, so their total income loss was only about $20,000.

What the article is saying is every woman who has a child receives $10,000 a year, simply because they had a child. Where does that money come from?

Denmark has one of the highest personal income tax burdens in the world. It includes:

• State income tax
• Municipal income tax
• Labor market contribution (AM-bidrag) – an 8% tax on gross income
• Optional church tax (if a member of the Church of Denmark)

Altogether, income-related taxes make up the largest share of total government revenue, with VAT taxes being the second largest share.

The median worker in Denmark makes about $89,000 per year, before taxes. Here is what happens to that:

• $33,000 is taken in payroll taxes
• an average of $3500 per year in VAT tax
• $4500 in a mandatory pension payroll deduction
• there are also other taxes for Capital gains, electricity, food, alcohol, etc. These other taxes average another $2000 per year.

In all, taxes take about 53% of the median Dane’s income. At any given time, roughly 30–35% of Denmark’s population receives some form of public transfer payment. That includes:

• Early retirement programs
• State pensions (old-age pension)
• Disability benefits
• Unemployment benefits
• Student grants (SU)
• Social assistance

With all of that, among working-age adults (roughly ages 18–64):

• About 15–20% receive some form of income transfer in a given year.
• A smaller share (often under 5–7%) receive long-term social assistance.

Another advantage Denmark has, is they have a different racial makeup.

If translated loosely into U.S. census-style categories:

• ~80–85% White
• ~5–8% Middle Eastern/North African
• ~3–5% Asian
• ~2–3% African

Now compare that to the US: In the US, about 45% of citizens are receiving government payouts, but in Denmark, college and healthcare are free of charge to the user.

So how does Denmark afford it? No one is excluded from income taxes. In the US, more than half of the country doesn’t pay income taxes.

Now imagine the howling if the US announced “free health care” and college, but changed to a simpler, no deduction, everyone pays income tax of more than 50%, up from the US average of about 30%. Yeah.

My taxes are all done, with the exception of my broker’s statement from my stock broker. For the 2025 tax year, I owe more than $3,000 to the IRS in April of this year. In total, I paid more than $47,000 in Federal taxes. On top of that, I paid over $7,000 in property taxes, thousands in sales taxes, and who knows how much in use taxes (like gasoline), tolls, and other miscellaneous fees and taxes. Call it more than $60,000 in total taxes for the year.

Don’t tell me that I don’t pay my fair share.

Tax season begins today. This is the time of year when I am grumpiest. I would rather set my money on fire than mail it to the IRS, and sitting here with all of these confusing forms and watching my money disappear always makes me cranky.

A reader sent me this by email, rather than simply commenting on the post, and I usually throw those out. However, this one seemed a bit interesting to me, so here we go:

JFK had a top income tax rate of 90% and this was the period of highest growth in our economy.  Perhaps you need to check your assumptions.

Obviously, he knew what he was doing.  Back then, in figuring out your income, you could deduct things like starting factories and doing research on consumer products.  In short. doing things that benefited other people allowed the brainiac to pay less tax.  

Even though top marginal tax rates were 70%–91% in the 1950s–1970s, the actual effective tax rates paid by high-income individuals were dramatically lower. Almost nobody really paid 91% — or anything close to it.

In the 1950s and early 1960s:

The top marginal rate was 91%, but it applied only to taxable income above about $400,000 (over $4 million in today’s dollars), and “taxable income” was drastically reduced by:

• Unlimited business expense deductions
• Oil & gas depletion allowances
• Real-estate depreciation
• Investment tax preferences
• Income shifting to corporations
• Trust structures
• Foundations
• Tax-exempt municipal bonds
• Deferral strategies

Thus, almost nobody actually reported enough taxable income for the 91% bracket to matter. Economists often say the 91% rate existed mostly on paper. Congressional and Treasury studies from the era showed that the average effective tax rate for high-income earners was typically 30–40%, but many wealthy individuals paid 15–25% after shelters while some paid near zero using aggressive loopholes (especially in real estate and oil).

President Kennedy even complained publicly that: “A millionaire may pay less taxes than his secretary.”

Sound familiar? This wasn’t a new phenomenon.

The 1986 Tax Reform Act (Reagan) slashed rates by 50% to 28% but eliminated many shelters — and ironically, many high-income individuals paid more tax after the reform, despite the lower rates. Because the tax code back then allowed:

• Unlimited itemized deductions
• Very generous depreciation schedules
• Income averaging
• Tax-free corporate perks (cars, housing, travel)
• Tax-exempt investments
• Turning salary into capital gains
• Family foundations and trusts
• Personal holding companies
• Business losses used to offset income
• The famous “oil depletion allowance”

In short, the rich could make most of their income disappear for tax purposes. This is why economists say the old system was “high rate / high avoidance,” whereas today’s system is more “lower rate / broader base.”

The other part of this was the minimum tax rate of 20%, which applied to everyone up to $2,000 per year ($20,000 per year in today’s dollar). Picture this- a person making $20,000 a year would owe $4,000 of it in taxes, and the poor didn’t have loopholes to exploit.

So don’t tell me how they were so good at taxing the rich back in the 60’s. It was JFK who advocated for a cut in tax rates and the elimination of many tax loopholes. The Revenue act of 1964 was passed after his death, and cut the top rate from 91% to 70%, but eliminated many tax loopholes. Still, there were many of them left, and most weren’t eliminated until Reagan lowered the tax rate even further while eliminating many tax write-offs. See the Laffer curve on how lowering taxes actually increases revenue.

The Republican Legislature of Florida is proposing changes to the state’s property tax policy. There are a number of proposals that will make it to the 2026 ballot, and I have researched them so you don’t have to. I am going to break it down for you, using my own taxes as an illustration. Then you decide which is the one you want.

In my case, I pay about $6100 per year in property taxes on a $600,000 home. It breaks down like this:

• $1700 goes to the county
• $2000 to the town
• $1900 to the school board
• $400 per year goes to police, fire, EMS, hospital, and the water authority. This part is not an ad-valorum tax.

HJR 201 (Steele): Eliminates non-school ad-valorum property taxes for homesteads entirely. This would lower my taxes to $2300 per year ($1900 for the school board, $400 to police, fire, EMS, hospitals, and the water authority). This bill doesn’t prevent taxes that are flat fee based. Localities will likely switch to a non ad-valorum tax scheme, such as charging each property a flat fee as a tax.

HJR 203 (Miller): Phases out those same taxes over 10 years by adding an additional $100,000 exemption added each year. My taxes would go down by $500 the first year, $500 the second, and so on, until my taxes were finally about $2300 per year. This bill doesn’t prevent taxes that are flat fee based. Localities will likely switch to a non ad-valorum tax scheme, such as charging each property a flat fee as a tax.

HJR 205 (Porras): Exempts Florida residents 65 and older from paying non-school property taxes on homesteads. This one won’t change my taxes a bit until I turn 65, meaning that towns will simply raise taxes on everyone else to make up for the shortfall. Since those over 65 already get major breaks, many of them don’t pay taxes, anyhow. Politicians won’t face as much voter backlash. I think this is the one that politicians will love.

HJR 207 (Abbott): Creates a new 25% homestead exemption on non-school taxes — aiding current and first-time homebuyers. This one was trickier to decipher. I believe that it would lower my taxes by about $400 per year. It doesn’t prevent rate increases. I predict that localities will respond by raising milage rates. In the end, there will be no net change in what you actually pay.

HJR 209 (Busatta): Offers an extra $100,000 exemption to homeowners who carry property insurance, intended to ease overall housing costs. This one won’t make a huge difference. It would cut taxes by about $500 per year, but it would be an effective subsidy to insurance companies, who will happily raise insurance costs in response. It honestly looks like it was written by insurance companies.

HJR 211 (Overdorf): Eliminates the cap on “portability,” allowing homeowners to transfer their entire Save Our Homes benefit to a new property, even if it’s of lesser value. This one only lowers your tax liability if you sell your house and buy one of lesser value. I just went through this when I moved two years ago.

HJR 213 (Griffitts): Adjusts caps on taxable value growth — limiting increases to 3% over three years for homesteads (currently 3% annually) and 15% over three years for non-homesteads (currently 10% annually). This one won’t help now, it will just keep taxable value from growing as quickly as it does now. The loophole here is so large, you can drive a truck through it- there is nothing here that prevents localities from raising rates, the only cap is on taxable value. The net effect is that this won’t change your taxes a single cent.

In my opinion, HJR201 is the only one that will change anything, since a person owning a $200,000 house will wind up paying the same taxes as a person owning a million dollar house. To me, that is fair, since both are nominally receiving the same government services. Same services should mean same taxes.