Educational revenue potential of a wealth tax in Florida

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Title:
Educational revenue potential of a wealth tax in Florida
Physical Description:
xi, 172 leaves : ; 28 cm.
Language:
English
Creator:
Carr, Fred Mirts, 1944-
Publication Date:

Subjects

Subjects / Keywords:
Education -- Finance -- Florida   ( lcsh )
Wealth tax -- Florida   ( lcsh )
Genre:
bibliography   ( marcgt )
theses   ( marcgt )
non-fiction   ( marcgt )

Notes

Thesis:
Thesis--University of Florida.
Bibliography:
Includes bibliographical references (leaves 166-171).
Statement of Responsibility:
by Fred M. Carr.
General Note:
Typescript.
General Note:
Vita.

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 000063264
notis - AAG8462
oclc - 04205528
Classification:
lcc - LB2826.F6 C37 1978
System ID:
AA00002208:00001

Full Text











EDUCATIONAL
WEALTH


REVENUE
TAX IN


POTENTIAL
FLORIDA


OF A


FRED


CARR


A DISSERTATION PRESENTED TO
OF THE UNIVERSITY
IN PARTIAL FULFILLMENT OF THE
DEGREE OF DOCTOR OF


THE GRADUATE
OF FLORIDA
REQUIREMENTS
PHILOSOPHY


COUNCIL


FOR


THE


UNIVERSITY


OF FLORIDA





































Copyright

by


Fred M.


Carr

























two wonderful


parents


whose


unalterable


faith


support


always


helped


smooth and


light


the way;


to my wife


Barbara and all


the members


an ever


growing Carr


fami ly


their patience,


concern


love.













ACKNOWLEDGEMENTS


author


would


like


expr


ess


thanks


to all


members


Institute


of Educational


Finance


pro-


viding


a family


atmosphere


in which


to work


and


their


much


appreciated


friendship.


To his


committee


members,


John


James,


valued


guidance


when


was


most


needed


to Dr.


Jame s


Hale


daily


professional


direction


personal


Michael


kindness


. Nunnery


and

his


concern.

very va


Thanks


Iluable


also


direction


personal


support


ove r


years.


Special


thanks


a deep


debt


of gratitude


owed


author' s


Chairman,


Kern


Alexander,


who


made


this


study


possible


who


gave


satisfaction


meaning


many


years


of work


through


prof


ess


ional


personal


guidance,


support,


encouragement,


concern.















TABLE OF CONTENTS


Page


ACKNOWLEDGEMENT

LIST OF TABLES


ABSTRACT


S . a a a a . iv


. . viii
a a a a a aa a a a S S a a1l


CHAPTER


INTRODUCTION


. a a. a a 1


Statement


Problem


. . 2


Procedures . . .

Delimitations . .. . .

LimitatLons .


Justification


Assumptions

Definition of


Study


Terms


REVIEW OF


RELATED


LITERATURE AND


RESEARCH


Florida


Tax Structure


. a a 13


Fiscal


Capacity


Tax Effort


15


Inequity


The Property Tax as
Financing Education


a Source of
. a . .


Substitute Taxation Methods


Education


A Wealth


Tax


S 39


Summary


. . 5







CHAPTER


PAGE


EFFECT


OF A WEALTH


TAX


ON FLORIDA


Determination


Wealth


of Florida


FISCAL CAPACITY OF
MEASURED BY WEALTH


Rankings
Wealth B


SCHOOL DISTRICTS AS
COMPONENTS AND PROPERTY


of the School Districts
ase Correlations .


LEGAL


ASPECTS


OF A WEALTH


TAX


S . 82


Florida


's Constitution


and


Statutes


Constitutional and
cations of a Wealth


Statutory
Tax .


Impli-
. .


CONCLUSIONS


AND


RECOMMENDATIONS


. . 9 90


Conclusions


Recommendations


APPENDICES


CALCULATED


TAXABLE


AMOUNTS


S. 9


DEFINITIONS


VARIABLE


DEFINITION


TAXABLE WEALTH
INPUT VALUES


IN FLORIDA


COUNTIES


TAXABLE WEALTH IN
PERCENT OF STATE
EACH CATEGORY .


TAXABLE WEALTH IN
PERCENT OF STATE
EACH CATEGORY .


FLORIDA
TOTAL FOR


FLORIDA
TOTAL FOR


COUNTIES
COUNTY


COUNTIES
COUNTY


FOR


FOR


SCHOOL DISTRICT NON
ASSESSED VALUATIONS


AVERAGE ADM AND
SCHOOL DISTRICT
OF STATE AVERAGE


-EXEMPT PROPERTY
1974 (IN THOUSANDS)


PER CAPITAL NON-EXEMPT
PROvERTY WITH PERCENT
AND STATE RANK .







APPENDICES


(continued)


PAGE


TAXABLE
TAXABLE


WEALTH
AMOUNTS


IN FLORIDA
PER ADM .


COUNTIES


TAXABLE
CHECK ON
AND RANK


TAXABLE
CHECK ON
AND RANK


WEALTH
STATE
ORDER


WEALTH
STATE
ORDER


IN FLORIDA COUNTIES
TOTALS, RANK ORDER
WITH CAPITAL .


IN FLORIDA COUNTIES
TOTALS, RANK ORDER
WITH CAPITAL .


WITH


WITH


ADM,


ADM,


TAXABLE WEALTH IN FLORIDA
RANK ORDER CORRELATION OF
COMPONENTS . .


TAXABLE WEALTH IN FLORIDA
RANK ORDER CORRELATION OF
COMPONENTS . .


COUNTIES
WEALTH


COUNTIES
WEALTH


REFERENCES


BIOGRAPHICAL


SKETCH














LIST


OF TABLES


Table


Page


BY SOURCE


FOR


FLORIDA


(PLUS


WEALTH
1974-7


WEALTH BY MAJOR DIVISION AND PROPERTY
CONTRIBUTION TO STATE WEALTH 1974-75
(PLUS CONTRIBUTING CATEGORIES) .


INCOME)


. 55


VARIATIONS
ASSUMING A


TOTAL AND NEW
LIABILITY .


WORTH


ESTIMATES


'IOUNT AVAILABLE TO THE GENERAL REVENUE
IN 1974-75 WITH THE INCLUSION OF A ONE
PERCENT WEALTH TAX AND THE DELETION OF
ESTATE, AND INTANGIBLES TAXES . .


EXPENDITURE FOP K-
GENERATED REVENUE
FUNDS TO REDUCE OR
PROPERTY TAX .


FUND


a a .


12 SCHOOLS IN 1974-75 AND
FROM NEW GENERAL REVENUE
REPLACE EIGHT MILL LOCAL
.


1974-7
REVENUE
$300 M
COMPARE
WEALTH


5
E
IL
ED
T


REVE
FUND
LION
TO
AX


NUE NEEDED TO REPLACE GENERAL
S, PROPERTY TAX FUNDS, AND ADD
FOR PUBLIC SCHOOL EXPENDITURES
REVENUES GENERATED BY A 1%
. . . 4 . .


VARIATIONS
DISTRICTS
WEALTH BAS
BASED ON A
TAX STUDY


OF F
S A
D ON
TUAL
SSES


ISCAL
PERCENT
PROPE
SCHOOL
SMENTS


CAPAC
TAGE
RTY V
L ASS
) AND


Y AMONG SCHOOL
TOTAL STATE
UATIONS (AS
SMENTS AND WEALTH
OTAL WEALTH .


REVENUE
VALUES
CAPITAL,


BY
AND
IN


SCHOOL
WEALTH
CLUDTNG


DISTRICT 1974
ESTIMATES PER
PERCENTAGES O


-75 PROPERTY
ADM AND PER
F AVERAGE


STATE PROPERTY
AND PER CAPITAL


aND WEALTH


AMOUNTS


PER


ADM


RANKINGS BY SCHOOL DISTRICT BY ACTUAL 1974-75
PROPERTY VALUES AND TOTAL WEALTH INCLUDING


. . . .
4







of Dissertation Presented


the University
Requirements f


EDUCATIONAL REVENUE


of Florida


the Degree


POTENTIAL OF


the Graduate Council


in Partial Fulfillment


of Doctor


of Philosophy


A WEALTH TAX


IN FLORIDA


Fred M.

August,


Carr

1977


Kern Alexander


Major


Department:


Educational Administration


purpose of


this


study was


to analyze an alternative


tax source which


could be


used


lieu


of a personal


income


tax,


provide


taxpayer relief


from


the real


property


tax,


and,


same


time generate


elementary


adequate


secondary


financial


education


revenue ror

the state of


Florida.


personal


income


tax,


while


financially


bene-


ficial


various


states,


is prohibited


the Constitution


state of Florida.


Funding


education


in Florida


further


restricted by


taxpayer


resistance


the major


source


educational revenue,


real


property


tax.


The wealth


tax was de

education.


iveloped as


alternative


tax


development


source


to finance


the wealth


involved


five


tasks.


first


task


involved


analyzing


theoretical


vantages


disadvantages of


a wealth


tax.


basically


a European method


taxation


been


noted


-L. %. J-


ability to


assess


forms


of wealth


which


would


other-


Abstract


Chairman:


funding


analysis


\ LJ~


P


L






The

structure


second

and


d


task was


to analyze Florida


the revenue capacity


s current


various


bases.


fiscal


capacity


state


and each of


sixty-seven


school


districts


was


calculated.


A wealth


tax has never


been


used


United


States;


therefore,


third


task was


identify


the components


or tax bases of


a wealth


tax and


quantify them through


data


provided by


state


and other


agencies.


The quantifica-


tion


the wealth


tax assessed


total


wealth


state of Florida


each of


sixty-seven


school


districts.


This


information


facilitated


thn analysis


state and


school


district


fiscal


capacities


under


the wealth


tax


Under


one


percent


wealth


tax Florida


could


have,


1974-75,


raised


enough


educational


revenue


to adequately


finance education


and equal


surpass


the average


national


educational


ex-


penditure


level.


fourth


task was


to compare


state


school


district


sures.


fiscal


capacities


wealth measures


under wealth

of fiscal c


property mea-


apaciti


were deter-


mined with


personal


personal


income.


and corporate


State


income,


and,


school district


without


fiscal


capacities


were compared


terms


total


property


and


total


wealth,


wealth


per


ADM and


per


capital and


property per


ADM and


per


capital.


Some of


school


districts


rich


in property were


found


to be


poor


in wealth.


Other


school


districts


poor


F n 1' n A


n rrrV ,r-\ ar -,, tTa r


4-C "\- v Y


-i~ rr y^ T- -a"I-^ -







fifth


task was


to show the


legality


of a wealth


since


the Constitution of


state of Florida


a pro-


hibition


against a


personal


income


tax and


it was


conceiv-


able


that


prohibition


could be applied


the wealth


tax as well.


Wealth,


therefore,


cannot be considered


income


is not


prohibited


from taxation by


the Constitution


state of


Florida.













CHAPTER


INTRODUCTION


The equalization of


educational


opportunity


requires


unselfish


effort


of human


endeavor


and most adequate


provision of


scal


resources


that


society


can provide.


This


is especially


true when


the waste of


human


potential


is considered


support


Alexander,


education can be


1976).


readily


lack of


detected by


fiscal


dissatis-


fied


employees,


obsolete


physical


plants,


and overcrowded


facilities.


It would be naive


educational


think


opportunity would be


that provision of

inexpensive. Un


equal


employ-


ment and


school


recession,


enrollments,


inflation


taxpayer


educational


animosity


costs,


toward


large


future


tax increases erode


fiscal


capacity


government


maintain adequate educational


programs.


It is


necessary,


therefore,


in Florida,


to derive


a system of


taxation


that


will


inhibit desirable


economic


conditions and


generate


educational


funds without


causing


adverse


taxpayer


reaction.


present method


financing Florida's educational


system has


as its major tax base


local


property tax.


The


property


tax,


is currently used,


been


con-


4- da i C* fl rh an 4-n n n rt


* nan,,. ?s k 1 a


C1: O anblr'^ 'Mlli


-- 1L -


CI ^ -


,.T17


-- -*f








property


tax base,


plus


portions of


other


state


bases allocated


to education,


do not provide adequate


support


Florida's educational


system when


compared


the average national


funding


effort


(Due,


1976;


Spar kman,


1975) .


Florida's


property


tax revenues


are


below the


revenues


that


could be raised by more equitable


taxa-


tion methods.


One method


implementation


income


tax.


This


not possible,


however,


since


Florida


tion


Constitution


income tax


currently prohibits

A second method


implementa-


use of


wealth


tax which,


while common


in Europe,


been


utilized


United


States.


The wealth


been analyzed


theoretical


equitable


properties


have


wealth


not been


carefully


tax has


educational


examined


potential


revenues and


this country.


increasing


taxpayer


equity.


Florida's


replace-


ment


property


progre


ssive


tax and


innovative


personal


step


income


towards


tax could


insuring


greater public


effort


to adequately


finance


Florida'


public


schools.


Statement


Problem


problem of


study was


to identify,


collect,


quantify the


components


of a wealth


system and


estimate


1 rC : 1 / n an 4- t t


- rw


/"**" /- 4-


__


1^ ~ ^ /^Tr" -


11 /-


--%


<-/" 4 -







Review Florida's


tax system and determine


implications


elementary


increasing


and secondary


revenues


education.


Describe


general


concepts of


a wealth


tax


and examine


theoretical


equitable


advant-


ages


and disadvantages.


Develop


the structural


components of


a wealth


tax applicable


state of Florida.


Review the


impact of


state of Florida


a wealth


affect on


upon

the


the

fiscal


capacities of


Establish


individual


theoretical


school


legality


districts.


of a wealth


Florida.


Procedures


The


procedures were


set out


in five


tasks:


Task


- The major tax components of


the Florida


system


have been discussed and


each


component


s contribution


Florida


fiscal


system analyzed.


Florida's


local


property


tax was also examined


to determine


the variation


revenues


it produces among Florida's


school


districts.


Task


- The most


prevalent


ideas on


what a


wealth


tax


assesses


and who


assessed have been


presented.


Some of


the more


prominent


theoretical


and actual


advantages


disadvantages


of a wealth


tax were explored.







Task


- The


various


tax base


components


of a wealth


have been


identified.


been designed


structure of


to utilize


tax data as


the wealth


collected by


state of Florida.


structure of


the wealth


has,


also,


been


able


to make


a comprehensive


assessment


of state


school


district


wealth.


Task


- The wealth


tax components


have


been quantified


revenue


potential


determined


to obtain


an estimate


of state


total


sixty-seven


wealth and


school


district


the wealth of e

ts. The wealth


ach of Florida


potentials


school


districts


have been


used


to determine


fiscal


capacity


and district percentages of


state wealth.


fiscal


capacities will


be measured


by various


bases


combinations


thereof


gleaned


from state


data


and other


sources.


total


wealth


capacity


state


school


districts were also compared


fiscal


capa-


cities


available


through actual


1974-75


state and


local


tax bases.


Task


- The


theoretical


legality of


a wealth


tax were


studied

cations


analyzed


for possible


use


constitutional


state of Florida.


ban on


for possible effects on


income


the wealth


Impli-


tax were


tax.


Major


cases,


bearing


legality


wealth


tax,


have


been


identified and examined


theoretical


impli







Delimitations


The


study


confined state wealth


to categories


under


two major


classifications


labeled


private wealth


and corporate


wealth.


study


also


confined


wealth measures of


fiscal


capacity


to state


school


district


total


wealth and


unit measures.


The wealth


tax data


are


only the state of


Florida


the counties


therein.


Data related


various


tax bases


this


study


were confined


1974-75


fiscal


year.


Limitations


The


revenues generated


specified


fiscal


this


year.


study


Revenue


are only valid


later


periods would


fluctuate due


to changes


popula-


tion and changes


in economic


indices.


Values


several


wealth


components are


accurate


only


the extent


validity of


the estimates


contained herein.


Data


used


calculation of


some


school


districts


fiscal


capacity were


reported after


state


fiscal


reporting


period.


data


these


school


districts


were obtained


from state


computer


estimates which


was


best available


Justification of


source.


Study







(Benson,


1973;


Berke,


Campbell,


Goettel,


1972;


New


York


State Commission,


inequities


property tax.


been


Property


1973) .


various


The major


states'


taxes


past


source of


use of


have


these


local


represented


to ninety-eight


percent


local


school


tax revenue


(Johns,


Alexander,


and Jordan,


1972,


19) .


local


property tax,


while noted


stability,


inescapability,


and beneficial


return


those on


whom


tax was


levied,


been more


noted


unjust


incidence on housing,


and,


the difficulty


and high


cost of


administration.


property tax also discourages


property


renovation,


influ-


ences


ments


siness


(National


locations,


favors


Education Finance


nonproperty


Project,


1971,


invest-


-10)


Education has been,


and is,


responsibility


states;


therefore,


states


lessen


disparties


found


property


tda ,


especially


impact


assessment procedures.


Florida needs


to implement


tax which will


adequately


support


educational


programs.


Florida


also


needs


to ensure


that


implemented


possesses


taxpayer


equity.


Since Florida is currently


using most available


tax bases


cannot


implement an


income


tax,


is necessary


Florida


find a


new tax


base


such


a wealth


tax.


Assumptions


assumed


this


study


that:


L


Y








determinants


of district and


state


taxable


wealth.


Data


obtained


from private


governmental


agencies


are


valid.


Definition


of Terms


Actual


tax


collection.


amount


revenue


collected


from a


tax or


tax


system during


a given


year.


Ad valorem


tax.


based


valuation


taxable


property within


state designated


for the


purpose


of generating


local


revenue.


Average daily


attendance


(ADA) .


"The


aggregate days


pupils were actually present


in school


divided


number


of days


school


was


actually


session"


(National


Education Association,


1975a,


Average daily membership.


Membership


is defined


total


number


absent and


present


students


belonging


school


gate days


roll.


ADM is calculated


of membership


the number


dividing the


of days


aggre-


in which


schools were


in session"


(National


Education Association,


1975a,


Corporate


income


tax.


corporate


income


tax,


legislated


by the Florida


Income


Tax Code,


is measured by


income,


where,


"net


income


is principally


federal


tax-


able


income with


certain


inclusions,


exc


lusions,


and adjust-


1 nr^r


/ /". 4-. t' h" a"" .' 1 n /1 ^ Tt I LA ,


Tmt"\f^ -^/- *


T- /i^ "i/-


Tn n "


n-


I L t.







used


includes


the

any


corporate

saleable


production


of goods.


leaseable good


Inventory


(Joint


Legisla-


tive Management


Equal


Committee,


educational


1975,


opportunity.


575).

Nondiscrimination


with

ally


regard


beneficial


individual's


educational


access


programs,


the most


facilities,


person-

and


finances.


Equity.


Equity


can


be referred


technically


vertical


equity


and horizontal


equity.


Vertical


equity


achieved when


cost


government t


is dis-


tribute


fairly


between


income classes.


Horizontal


equity


achieved when


cost of


government


is shared


equally


among


people


in similar


economic circumstances


(Peachmen,


1971,


Fiscal


capacity.


Fiscal


capacity


used


interchanqe-


ably,


this


study,


with


terms


fiscal


ability


financial


capability.


It refers


the calculated


revenue


from one or more


tax bases which


taxing


authority may


use


to develop and maintain public


services.


Fiscal


neutrality.


Fiscal


neutrality,


the economic


definition,


refers


the nondistortion


consumer


choice


use of


socially


tax financed


undesirable


goods


condition


and services


(Ben son,


because of


1973,


some


55).


Education


usually


refers


to fiscal


neutrality


prin-


ciple of


not


having


the quality


a student's


education








Impact.


Impact of


tax refers


to the responsible


party


on whom a


legally


levied.


Incidence.


Incidence of


tax


refers


person


or persons who actually


incur the


burden


paying


regardless


legal


intention.


Intangible


taxes.


Taxes,


Florida,


which


are


levied


on corporate or


personally


owned


stocks,


bonds,


and notes


at a


rate


of one mill


annually.


There


also,


mill


levy


on mortgages which


is assessed


time


recordation


(nonrecurring).


The


taxes


include an


annual

(Florid


taxpayer

a Senate


and

Ways


spouse


exemption


and Means


Committee


$20,000

, 1976,


each


45) .


Overutilized


tax.


overutilized


is one


which


potential


tax collections


are


less


than


actual


collections"


Quindry,


1976,


Personal


Income.


The current


income


of persons


an area


from all


sources.


is measured be


fore


deduction


income and other personal


taxes,


but


after


deduction


personal


contributions


to social


insurance


programs.


(Bureau


Economic


Business


Research,


1976,


117) .


Personal


income,


this


study,


is used


interchangeably


with private


income.


Potential


collection.


amount of


revenue


that


could be collected


applying


rate which


is equal


the average


rate


states


using


a particular tax or


tax







Real


property.


organizational


individually


owned


property


designated


as one of


following


classi-


fications:


vacant residential,


single


family residential,


mobile


home,


multifamily


units,


condominia,


cooperatives,


retirement homes,


vacant


commercial,


improved


commercial,


vacant


industrial,


improved


industrial,


agricultural,


institutional,


government,


leasehold


interest,


miscellaneous,


or non-agricultural


acreage.


Real


property


tax.


real


property


tax will


used,


this


study,


interchangeably with


local


property


tax and


property tax.


It refers


levied


non-exempt real


property


classifications.


Sales tax.


A four percent charge on


retail


sales


of most


tangible


personal


property


items,


motor


vehicles,


transient


lodgings,


commerical


three


fishing


percent


admissions


equipment.


cost.


to amusements,


ships


Farm equipment


(Florida


taxed


Senate Ways


Means Committee,


1976,


Tax base.


product or


goods,


including


income,


on which


tax is


levied.


Taxation.


The means by which


governments


transfer


private


financial


resources


public


sector


social


economic


benefit.


Tax


effort.


Tax effort,


purposes


this


study,


will be


used


interchangeably with


fiscal


effort.


The


term


58) .








Underutilized


tax.


underutilized


occurs


when


the actual


collections


are


ess


than


potential


collections"


(Quindry,


1976,


Utility.


Given


equal


satis


faction


among


income


asses


, and


each


additional


dollar


earned


over


theo-


retical


amount,


gives


ess


and


ess


sati


faction


then


each


dollar


taxed


away


from


rich


used


poor


adds


total


social


benefit


(Samuelson,


1970,


155) .













CHAPTER II


REVIEW OF


need


RELATED


a more


LITERATURE AND


productive


RESEARCH


equitable


support


education


Florida


supported by


a variety


literature and


tion


research.


is reviewed along with a


Florida' s


review of


support


Florida


educa-


s tax


structure.


inequity


of Florida's major


educational


tax,


property


tax,


is documented


through


past


research.


utility,


efficiency,


attitudes


taxpayers


toward


property


are


studied


terms


societal


effect.


property


tax


is also explored


terms


fiscal


capacity.


A general


review


recent


court holdings with


regard


state


financing


education


also


presented.


Literature on


effort and


socioeconomic variables,


they


relate


to different


tax bases,


are discussed.


literature and


research on


a] ternative


tax bases


are


included


and material


is presented


a wealth


system.


methods of


wealth


taxation.


is compared


The wealth


to property


literature


income


reviewed


to present


the most


prevalent definitions


a wealth


as well as what


literature


utility


research


efficiency


, lastly,


aspects


explores


possesses.


the advantages


_








Florida


Tax Structure


Florida's


tax


structure


is composed


of a locally


administered


property


a variety of


state


admin-


istered


taxes.


These


state and


local


taxes make


important


contributions


support of


education.


To further


understand


these


tax bases Florida's


property


and


General


Revenue Fund need


to be examined.


Florida


state and


local


revenue


sources are


tied


several main


tax bases.


The main


local


base,


ma3 or


source of


approximately


750 million


dollars


local


school revenue, is the

and Business Research,


property


1976,


tax

94).


(Bureau


Economic


Counties and


school


districts


have co-terminus


boundaries


Each


county


assesses


property


cent market


district has


at different


value


percentages


although state


the option


raising


"just"


law stipulates


mills


per-


each school


to support


schools.


ranged from


Florida


1975


65 percent


ad valorem


true


tax assessment


property value,


in one


ratio


school


district,


to 96 percent of


true


property value,


in another


school


district


(Department of


Revenue,


1975,


121).


state


representative,


investigating property


abuses,


found


that


Bradford


County


assessed


timberland


acre while


same


stand,


located


in neighboring


Alachua


County,


was


assessed


acre


(Shields,


1977,


IE) .


It could be


reasoned


, from this


example,


that,


without







could also be assumed


that


the assessment and village


difference


among


counties


school


districts


creates


wide


variations


The majority


attainment


state


sources


educational


financing


funds.


education


comes

Fund


from


the General


consists of


revenue


Revenue Fund.


raised


through


General


various


Revenue


tax bases.


The main


sales


source of


tax which


state


contributed


revenue,


54.3


1974-75,


percent


was


the General


Revenue Fund.


Other major


state


taxes


their


per-


centage


the General Fund


revenue were:


the corporation


income


tax,


8.16


percent;


the beverage


tax,


7.84


percent;


the motor vehicle and


license


tax,


6.00


percent;


other


taxes which


include


intangibles,


cigarette,


documentary,


insurance,


estate,


parimutual


wagering,


others,


22.7


percent


(Lewis,


1975,


The


total


amount


the General


Revenue


Fund


, ill


1974-


was


approximately


2.21


billion dollars.


fund's


contribution


to education


was


58.51


percent


total


amount


billion


dollars.


The


previous


four


fiscal


years


showed


increases


in general


revenues


consistent


decreases


in contributions


to education.


1975-76


reversal


occurred.


The General Fund's


educational


contri-


bution


increased


collected de


creas


58.79 percent but

to $2.19 billion.


the t

This


total

was


revenue

an actual


decrease of


$22.5 million


in Fund dollars.


actual







Fiscal


Capacity


Tax Effort


Florida 's


fiscal


effort


to finance


education


ranked relatively


low when


compared


to other


states.


Figures


released by


Florida


Coluuis sioner


of Education


show that Florida raised


approximately


.1 billion dollars


kindergarten


both state


through


local


grade


taxation.


twelve i

Federal


n 1974-75

sources


from


supplied


percent


that amount.


State


sources


supplied


54.5


percent or


1.15


billion dollars while


local


sources


contributed


750 million


dollars or


35.6


percent


educational


revenue


(Bureau


of Economic and Business


Research,


1976


, p.


94) .


In order


to adequately


assess


Florida


s fiscal


effort


education,


actual


expenditures must be compared


Florida's


revenue


potential.


Revenue


potential,


calculated


from several


tax bases or


personal


income,


is generally


used


an estimate


fiscal


capacity.


The


comparison


obtain a


states


effort,


usually


calculated


terms


per pupil


expenditures divided by per


Florida has consistently


high


capital


unused


tax potential.


potential


low


overall


tax burden.


Due


(1976


, using


1973


fiscal


data,


calculated additional


potential


revenue


fifty


states


using


taxes on


sales,


personal


income,


cigarettes


and


liquor,


corporate


income.


Florida


ranked


47th out


fifty


states


in its use of


fiscal


capacity


Due







effort.


Florida's


effort,


under


Sparkman's


system,


was


found


to be only


73 percent


the national


educational


effort


(pp.


190-191).


Quindry


Currence


(1976)


did


study


using


1974


data.


They


showed Florida


to have a


relatively


burden when compared


the other


states.


Florida ranked


41 out


study


also


fifty-one


tax


showed Florida


systems


to have a


tax burden.


Their


large untapped


fiscal


capacity


86) .


A similar


study using


1975


fiscal


data


revealed


that Florida's


effort could have


increased


even more.


This


study


showed Florida's


tax burden


to be


44th among


fifty


states


plus


the District


of Columbia


(Quindry,


1976,


88) .


The


1975


study


calculated Florida's


unutilized


potentials


91.5


million


dollars


cor-


porate


income


tax,


million


dollars


individual


income


tax,


580.7


million dollars


in general


property


total


1,668


million dollars.


general


sales


tax,


compared


average of


other


states,


was utilized


completely.


State


tax revenue accounted


62.4


percent


total


tax collections while


local


contributions


amounted


to 37.6


percent


(Quindry,


1976,


96).


The National


Education Association


(1975b)


ranked


Florida


27th


out


fifty


states


in estimated


current


ex-


penditures


for public elementary


secondary


schools


pupil


average daily membership


63) .


also








Florida


raise


the national


per pupil


public


school


expenditure


dollars


additional


million


level, it


would have


per pupil


in ADM.


collections,


dollars


increase expenditures


This would have required


1974-75,


approximately


(National Education Association,


32).


Sparkman


(1975) ,


using


1973 data


on net personal


come,


calculated


state


local


expenditures


ADM.


found Florida' s


state


educational


effort


to be


.0381


while


the national


effort was


.0490.


Florida's


state


effort,


therefore,


was


percent


average


for the United


States.


This


ranked


Florida


45th


effort among


fifty


states.


Should Florida have expended another


dollars


ADM pupil,


it would have


tax revenues


reach


required


(pp.


national


additional


290-291)


expenditure


million


The National


level,


dollars


Education


Association


(1975a)


estimated Florida's expenditures,


public


mately


elementary


secondary


billion dollars.


schools,


In order


Florida


approxi-


to attain


the national


expenditure average


it would have


to have


ex-


ended


an additional


million


dollars


31) .


The


financing


national


of public


average.


schools


There


Florida


a defi


does not come


cit between Florida's


educational


financing


revenue and what


the national


average


would

effor


be derived f

t of between


rom

200


1975a,


w








Tax


Inequity


Support


taxpayer


education has come


his own


benefit and


from


individual


advancement


of public welfare.


necessary


order


Today,


to develop economy


to maintain


support

ic and


increasingly


education


individual


technical


growth


inter-


dependent society.


Elimination


favoritism and


discrim-


nation


from


present


educational


tax


systems


can


only


accomplished by


defining


equity


implementing


system which maximizes


components


that defini-


tion.


Due outlined


four


concepts which contributed


to an


equitable


structure.


The


first


equal


treatment


equals


or horizontal


equity,


where


people,


similar


economic


situations,


are


taxed


at similar


rates.


concept


essential


to equitable


taxation;


however,


actual


implementation


is difficult.


A problem arises


the classification of


taxable


groups


Arbitrary


classi-


fiction can


lead


to unreasonable


taxation


certain


economic


groups.


It is


important,


therefore,


adequately


measure


fiscal


capacity


taxable


divisions.


second


concept


that


tax burden be distrib-


uted according


ability


pay.


This


known


vertical


equity which


levies different


tax


rates


tax-


payers


different


financial


situations.


Taxpayers with








related,


concept


states


that


individuals with little or


fiscal


capacity


be exempted


from


tax payment.


This


is done


to eliminate excessive


burden


those


least able


pay.


final


one


relates


responsiveness


flexibility


tax.


An equitable


tax will


raise


revenue


base.


The


capacity more


tax will


rapidly than


responsive


economic


current

fluctua-


tions


financial


should not


stress.


levy


Due uses


excessive


income as


burdens


the most


times of


economically


responsive


tax base


(Due,


1970


, p.


293) .


An equitable


tax,


system,


taxes


those who


benefit and


adds


total


soc


ial benefit.


Buchannan


(1970


referred


the benefit


principal


taxation,


whereby


burden


is distributed among


taxpayers


based


incremental benefits derived


from


the governmental


service


108).


The


justification


taxing


the wealthy


proportionally more


than


those with


less


wealth


lies


assumption


that


the more wealthy


received more


benefits.


Total


social


benefit


achieved


through


economic


theory


utility.


theory


assumes


that


taxpayers


receiving


the greatest benefits


from a


social


service,


receive


less


utility with


each


extra


unit


service


consumed.


The


wealthy


theoretically


receive


the most


benefits;


therefore,


the more


the wealthy pay


to provide


social


service,








An equitable


tax will


efficiently


distribute


finan-


cial


resources


back


into


the communities.


tax


distributes


it's


resources


unequally,


then becomes


inefficient.


Dalton


(1970)


stated:


An unequal


distribution


of a given


amount
number


of purchasing
of people, is


to be wasteful


view of


unequal
waste.


power


among


therefore,


distribution


from


economic welfare,


the distribution


a given
likely
the point
the more


greater


Taxation,


therefore,


should be efficient


to have


equity


and social


justice.


Efficiency


also,


Impor-


tant


terms of marginal


utility.


The wealthy,


unequal


resource distribution,


receive


less


satisfaction


from


the resource


than


less wealthy.


In an


efficient


system the


resource


is shifted


less wealthy,


thereby


raising


their


level


satisfaction


increasing


utility


the resource.


Another


equitable


trait


tax


ability


encompass s


taxable


sources


rather


than


one or two


specific


items.


It should


also


be coordinated


with


other


taxes


so as


to complicate


implementation


cause duplica-


tion.


tax


should


avoid shifting


to the


taxpayer


less


able


to pay.


Fiscal


neutrality


is also an


important


aspect


equitable


tax.


Economically


fiscally


neutral


should


not cause distortion


in consumer


choice of


public


services








not


being


dependent


upon


wealth


of hi


or her


school


district


(Johns


, 1976,


546)


which


fulfills


requirements


discus


sed will


have


great


capa-


ability


remove


income


fiscal


economic


wealth.


capacity


Florida


barriers


It will


enhan


state


more


fluid


accurately


a progressive


local


tax


stem


movement


measure


stem.


been


shown


to be inequitable.


A recent


study


surveyed


forty-eight


states


developed


a family


burden


related


come,


, property,


motor


vehic


cigarette


taxes


Famili


of $5,000


in Florida,


7,500


year,


with


rank


average


45th


group


among


incomes


forty-


eight

$17,50


states


average


tax burden.

group incomes


Famili


with


ranked


47th


10,000

tax b


urden.


The


income


group


with


burden,


48th


among


surveyed


states,


were


those


family


earning


25,000


50,000


a year.


The


regressiveness


of Florida


s tax


was


detailed


when the


study


related


percentage


family


income


paid


taxes


A family


with


an income


5,000


a year


paid


perce


nt of


their


income


state


and


local


taxes


while


family


with


7,500


a year


income


paid


pierce


taxes


Similar


ecreasing


per-


centages

income.


were

They


found

paid


among


perc'


families

ent of t


with


heir


10,000


income


a year

taxes


while a


family


earning


$17,500


yearly


income


paid








paid


only


percent


income


taxes.


Per-


centage wise


latter


category


paid


only


one


third as


much


poorest


family


(Lile


, 1975,


30-46).


Efficiency


and marginal


utility


can reasonably


assumed


to be


from realization


in Florida.


lowest


income


groups


are


left


with


least


disposible


income which


violates


principles


of marginal


utility.


efficiency


tax system


is minimized


Florida


low tax


effort.


The


level


taxation


reflects


a low


level


human


education,


resources.


which,


inefficiently


The regressiveness


develops


of Florida


Florida


s tax


system


indicates


a needed


change


to a more


efficient


system which


taxes


less


wealthy more equitably.


Property Tax as


Source of


Financing


Education


property


tax has


been


a locally


accessible


productive method


financial


taxation.


support


It has


elementary


provided


secondary


the majority


schools


it has


also


been


one


the most


regressive


taxes


levied


taxpayers.


Shannon, using


data


from the Advisory


Committee on


Intergovernmental


Relations, shows


that


property


tax made


percent


taxes


paid by


family with


children


earning


$12,000


a year.


tax


ranked


third


behind


federal


income


tax which


took


percent


income


social


security


tax which


V- nlr 4T nV fi rh n*a t a a ,-. r. *-


4-n ~ ^\L


* I


nn rn n ni^\- 4


< L


I I*ft "


-^ 4 *-^ ^


Ct ^-








homes


as a percentage of


family


income.


Single


family


residences were


taxed


percent


family's


income


earning


less


than


2,000.


Families earning


5,000 or


more only paid


percent of


their


income


prop-


erty


tax


Shannon,


1973,


25-2


Taxpayer


Attitude


Reasons


for the


unpopularity


local


real


prop-


erty


tax are


related


various


functions.


The


incidence


usually


borne by


those


least


able


pay.


administration


assessment


procedures


are costly,


difficult,


and non-uniform.


The


property tax also dis-


courage


investments


production


of goods


that


require


large amounts of


land,


redevelopment of


poorer rundown


areas


(Nitzer,


1973,


13) .


Inflation,


unemployment,


and


increased


costs


public


services


lead


to demands


higher


taxes.


Conversely, the


resistance


same


to any tax


situation has


increase.


also


A Gallup


taxpayer


poll


public's


attitude


toward


financing


education


showed


great


reluctance


increase


add new


taxes.


When


given


the choice


between rising


reducing


local


local


taxes,


taxes


public


increasing


greatly


state


favored


latter


choice


(O'Reilly


Sheridan


, 1975,


10) .


A poll


conducted


1972-73


found


percent of


people


surveyed


thought


that


local


property


tax was








While


those


surveyed were against


further


federal


volvemen t


they


favor


state help


in property


relief


(Advisory Commission on


Intergovernmental


Rela-


tions,


1973,


. 1-4).


A 1976


poll


showed


little change


from


earlier


polls.


When


asked


what


tax


they would raise


increase


state


revenues,


45 percent


chose


state


sales


tax.


When


given


a choice


, however,


between raising,


lowering


or keeping


the same


taxes


increasing,


decreasing,


keeping


same


level


of governmental


services,


per-


cent


Only


voted


to keep


percent


present


voted


increase


level


taxes


services


services.


and raise


taxes


(Advisory


Commission


Intergovernmental Relations,


1976,


6-7)


Rothenberg


1974)


identified and


analyzed


three


major


interrelated


trends


restructuring


state


local


taxes


since


early


1960's.


The


first


trend


been


taxes.


to shift


shift


from the


taxing


local


property


authority


to state


has helped


implement


second


trend which has


been


to use broad-based


taxes


greater


and more


eiditable


taxpayer participation.


Both


trends


indicate


a growing


dissatisfaction,


among


legis-


latures


taxpayers,


with


local


property


tax


as a


source of


revenue.


third


trend


been


avoidance


increases


at yearly


intervals


combina-







rate of


assessment,


provides


a sufficient monetary


return


finance governmental


services,


responsive


economic


fluctuation


which affects


taxpayer's overall


fiscal


capacity.


system


which efficiently


accom-


plishes


attitudes


these


are


tasks


clearly


not been


demanding


perfected but


increased


taxpayer


attempts


develop


such a


system.


Fiscal


Capacity


The


local


real


property


funding


schools


several


drawbacks.


the quality


The most obvious


of a child's


drawbacks


education depends


upon


are

the


that

prop-


erty values within


a school


district


attitude


taxpayers


back


toward


that a


funding

strict' s


education.

fiscal ca


A less


ipacity may


obvious draw-

leave wide


discrepancies with


assessed


property values.


Districts


which


have


a large


amount


agricultural


property


do not


necessarily


taxes.


possess


Similarly,


large


annual


districts


that


incomes


possess


property


residents with


large


annual


incomes may


have


low property valuations.


There are


numerous ways


to measure


the wealth


designated area.


Each way will


usually


give a


different


estimate.


Some of


these


estimates


are widely


disparate


National Education Association


(1975b)


ranks


Florida


23rd


out of


fifty


states


in personal


income


pupil


ADA.


The


income wealth, using


1973


data,


was calculated







per pupil


ADA.


study


showed a


range of wealth


among


Florida


s school


districts,


from $14,263


ADA


pupil


$116,01


ADA pupil.


The median


value was


$34,681


ADA pupil


(Callahan


and Wilken,


1976,


Obviously


different measures


of wealth can


lead


to differ-


ent assumptions concerning


the wealth


an area.


Ross-


miller,


Hale,


Frohreich


(1970)


found


that Florida,


depending


the measure of wealth


used,


fluctuated


greatly


fiscal


personal


capacity.


income


National ly


capital,


, Florida


40th


ranked


in effective


29th


buying


income


(EBI)


household.


The


1966 data


showed a


differ-


ence


in fiscal


capacity


based


on property values,


due


solely


units of measurement


used.


study


ranked


Florida


30th among


states


, based on


property values


capital,


while


Florida


ranked


15th


in property


values


per pupil


219)


Rossmiller


et al.


(1970


stated


problem


accu-


rately when


they


said:


problem


school


involved


support would be


principal


measures


measuring
simplified


of fiscal


equity


capacity


income


property valuation--were closely


correlated


they


are not.


Supporters of


income a


s the


best measure of


fiscal


capacity


raising


school


funds


cite


fact


that


almost all


taxes are


paid


from


income ;


therefore,


income


only valid measure of


taxpaying


ability.


Studies


show


a low


correlation between


income


property value







states'


family median


income


local


school


districts'


property values.


Wisconsin


had


a high


correlation with


.57.


Other


states


showed


less correlation.


New


York


had a


correlation of


.40,


Oregon


and California had


.34,


Massachusetts,


.30,


New


Jersey,


.26,


New Mexico,


.09,


Washington,


.01,


and Nebraska


correlated negatively with


(James,


Thomas,


and Dyck,


1963,


7-8).


Farner


Edmundson


1969)


compared


assessed


value


of property per pupil


with


various


wealth measures


eleven


western


states


They


calculated Spearman


Rank


Order Correlations


between


these measures


of wealth


determined


the surveyed


an overall


states.


algebraic mean


Equalized


coefficient


property valuations per


pupil and


income


per pupil


showed no


significant


correlation.


The most significant rank


order


correlations


between


measures was


.31,


found


in Colorado and Washington.


Montana


has


lowest


correlation which


was


.14.


The overall


algebraic mean


coefficient for


the eleven


states


was


.09.


Analysis


of other


correlations


fiscal


capacity


showed


no significant


relationships.


Property values


pupil


retail


sales


per pupil


correlated


from a


in Wyoming


to a +.33


in New Mexico.


The mean


coefficient was


+. 03.


significant


correlation was


found


between


income


per pupil


and


retail


sales


per pupil.


mean


coefficient was


.54.


Wyoming


had


the high


correlation


with


while







taxpaying


ability


of a county as measured


by property per
to that county's


pupil


not


taxpaying


usefully


ability


related


as measured


by income per
relationship


pupil


pupil
between


sales


income


is consistently


per
per


high


pupil.
pupil an
nd could


sales


use-


ful,
ment


as an


taxpaying


alternative


ability


the measure-


terms


property


per pupil,
finance.


studies


the dominant


cited show


practice


in school


the disparities


involved


determining


fiscal


capacity when


different measures of


wealth


are


used.


They


do not


conclusively


decide that


one measure


is best


assessing


fiscal


capacity.


Simi-


larly,


studies do


propose


system which would


be more


equitable


financing


education


in developing


better


taxpayer


consensus


toward


funding


education.


the Financing


of El cation


courts


have


long


been


aware of


importance


concept


equal


educational


opportunity.


This


con-


cept has


lead


recent


court battles over


present


methods


financing


education.


The United


States Supreme


Court has


held,


in Brown


Board


of Education


Topeka


(1954)


Today,


education


perhaps s


the most


important


function


state and


local


governments.... It


very


foundation of


good


citizenship....


may


these days,
reasonably


is doubtful


be expected


that any
succeed


child


life


if he
tion.


is denied


Such


undertaken
be available


opportunity


an opportunity,
to provide it, is
e to all on equal


an educa-


where


a right
terms.


state


which must


483)


Vari nlu


cnn r i


ra SPS


have=


f rnm


n 1int-i f


rnn--


rY.qn 1 i-







unequal


educational


opportunity.


In 1973


United


States


Supreme


Court


directly


addressed


problem


using


local


property


finance


education,


in San


Antonio


Independent


School


District


Rodrequiz


1973).


stated:


The need


apparent


reform


tax


stems


which


may


have


local


innovative
its methods


reli


ed too


property


new


tax.


thinking


long a
And,


d too heavily
certainly,


to public


funding,


education,


necess


assure
greater


both


a higher


uniformity


level


of quality


opportunity.


The


United


States


Supreme


Court


involve


self


constitutionality


states


educational


tax system; ho

heard cases ch

The California


ever, a number

allenging their

Supreme Court


state


supreme


educational


held,


Serrano


courts

systems.


Priest


1971)


, that


each


school


district


could


raise


different


amounts


of educational


revenue


based


same


tax


rate


but


condone


property


tax


use


equalization


present


school


use


revenues.


local


The


court


stated


that


present


finance


system


property


"invidiously


discriminates


against


poor


because


makes


function


quality


wealth


of his


of a child


parents


s education


neighbors"


584).


The


New


Jersey


Supreme


Court


in Robinson v. Cahi 11


(1973)


allowed


different


ces


in3 expenditures


on a per


pupil







efficient


school


system could be


achieved by


finances


derived


from


local


taxation.


A recent


survey


school


finance cases


revealed


that at


least


fourteen


states declared


their


educational


finance


systems


unconstitutional.


The courts


generally


found


that


tax


system made


level


child's


education dependent


upon


the wealth of


the district


where he


been


Board


resides.


challenged


County


Florida's


in several


et al. v.


educational


ways.


State of


funding


District


Florida,


system


School


Department


of Administration

suit brought by


case number


forty-three of


73-1747,


sixty-seven


a class

Florida


action

counties.


plaintiffs


are


trying


to stop


application


"cost


of living


index"


which


they


claim


based on


false


figures,


resulting


in a distortion


equitable


financial


support.


Owenby vs.


Askew


attacks


Florida


s use of


the ad


valorem


tax.


This


case


questions


legality


of using


non-uniform

(National E


tax rates


the Florida's


education Association,


1975c,


sixty-seven counties

pp. 44-46).


United States


Supreme Court expressed dissatis-


faction with


property


tax as


a method of


financing


education,


but


it did not


rule


invalid measure


fiscal


capacity.


State Courts


have


turned


problem


of developing


an equitable


finance


system over


legislature.


root


problem


lies


in adequately








problem in determining


fiscal


effort and


fiscal


capacity


when


it states


clearly


incorrect....to contend


that


'poor'


live


'poor'


districts


(Yale


Law


Review,


1972,


1328-1329).


It found


in the same


manner


that


rich


do not all


live


in property


rich


school


districts.


Such


court decisions


have cast


doubts


property tax as


an adequate assessment of


a school


district


tax effort.


Tax Effort and


Socioeconomic


Variables


Alexander


(1975)


conducted


a study


on over


one


thousand


schooll


districts


in California.


The results


re-


enforced


findings of


Supreme Court on


the mixture


of economic classes


One of


within a


strongest


district.


findings of


Alexander


this


stated:


study


that most definable groups--whether


classified by


income,


race,


ethnic group,


or urban


status


are distributed across


high


and low-spending
proportions. (p


school


districts


in similar


The


study


also


found


that


relationship


between a


school


district' s


per pupil


expenditure


average


family


income was


very


close


to random.


Wealth


differences


between a rich district,


such as


Beverly Hills,


and


poor


districts,


such


as Baldwin,


not


give


true


picture


of wealth distribution for


great majority


older


districts.


Assessed


for most


property


variations among


luations were responsible

the districts' collected


------- 1- 1


_


- *


_


r _


_ 1 1


1-








property


(of which residential


property


percent),


is uncorrelated


with


income


(pp.


v-vi).


reason


the noncorrelation was


because other


cat> lories of


prop-


erty,


especially


negatively


farm and


income.


industrial

positive


property,

residential


related

correla-


tion and


the other negative


correlation resulted


in a


random correlation between


property


income.


district data


showed


that residential


property was dis-


tribute more


unequally


among


the districts


tha n


commercial


industrial


property


that all measures


unequal


wealth were more


pronounced


small


districts.


Even


local


income measures


showed wide


variations


among


districts.


inequality


these measures


decreased


with


increase


district size


Alexand


1975,


Accurate measurement of


local


wealth


important


order


to relate


local


districts


effort.


Alex-


ander's


findings would


seem to dictate a move


toward a


wider


tax base and


larger


taxing


district areas


to avoid


wealth disparities.


Weiss


(1970)


stated


"the


disparities


in local


wealth


are


particularly


important


insofar


they


affect


variation


tax effort and


school


spending


local


level"


18) .


Measurement


local ability


local


effort


to support schools,


based


on equalized


local


property valuations


pupil,


basic


school


tax rates,


current


expenditures


pupil,


was


conducted by Weiss


43).







expenditure


pupil.


correlations


ran


from


Vermont


Massachusetts.


inverse


correla-


tion


was


found


between


equalized


valuation


per


pupil


basic


school


rates.


Rhode


Island


Vermont


correlation


which


was


least


negative


value


while


greatest


negative


correlation


was


New


Hampshire.


No significant


ables.


correlation


Generally,


was


found


higher


among


rates


three


not


yield


varl-


high


expenditure


expenditure


levels.


levels


Richer


communities s


at consistently


showed


lower


increased


rates


(pp.


21) .


Yang


economic


eighty-one


Chaudhari


variables


local


school


1976)


tax


related


effort


districts,


seventeen


three


Illinois,


SOCio-


hundred


based


1974


covered


medium,


rate


data.


among


A wide


groups


high.


range


classified


study


reveal


effort


low,


that


was


medium,


high


high


effort


groups


were


high


in proportions


of residents


who


possess


high


educational


incomes,


high


attainment,


residential


high


housing


occupational


values,


status,


high


high


popula-


tion


density.


The


assess


d property


valuations


medium,


high


medium,


high


effort


groups


were


rela-


tively


compared


to property


valuations


effort


group.


group


highest


assessed


valuation


property


ADA.


medium


effort







Farner


Edmundson


(1969)


found


that


counties


which had high


property values


income were


small


and rural.


They


usually


low or


negative growth rates


low population


density.


opposite of


these counties


were


urban


suburban


counties which


usually


had


property values


and high


income


Alexander


and Kay


found


similar


results


in a study


fiscal


effort


Kentucky


school


districts.


effort


school


districts were generally


found


to have


high


per-


centages


income


years


families,


over,


unemployment,


farm derived


population


income.


High


effort districts


generally


possessed high


percentages


adjusted


gross


income,


educational


at tainment,


tax


paid


commercial


rented housing,


industrial


and white


property,


collar workers


population mobility,


(Alexander


Kay,


1973,


68-69).


It would be


reasonable


assume


that


a school


dis-


trict's fiscal


effort


function


of the


socioeconomic


variables


identified


these


studies.


obvious


that


high


effort districts


possess


higher percentages of various


forms of wealth.


property


only


assesses


one form of


wealth.


In order


adequately


equitably


estimate


school


district


effort


in relation


to its


fiscal


capa-


city,


forms


of wealth


should be considered.


A wealth


tax would


various wealth bases,


unlike


property


35).







Summary


ere


is no basic


consensus


on what


taxes


or measures


local


school


district


wealth


should


be assessed.


conceivable


that


combinations


of different


wealth


measures


will


have


to be


used


overcome


regress


aspects


local


property


Rossmiller


et al.


(1970)


conclude


that


locally


levied


taxes


could


not


use


in an equitable


manner.


The


study


stated


That


through
ment, i
levied
state o


greater


taxes


can


larger
federal


fiscal
levied


equity


achieved
taxing


cannot


units
only
units


government


achi


local


through
such as


(pp.


eved


gove
taxes
the


rn-


-255


Farner


Edmundson


(1969


came


similar


conclusion


Their

base


study


advocated

increase


ess


in sta


dependence

te support.


property


The


shift


tax

tax


authority


would


overcome


sparities


incorporated


lack


a district


relationship


s fiscal


between


capacity


local


raise


property


school


xes


funds


Recommendation s


to abolish


essen


effects


property


tax


have


been


espoused


in many


other


studi


problem,


however,


to find


tax


which


will


adequately


assess


fiscal


capacity


suffi


ciently


generate


enough


financial


resources


to replace


property


tax.


Johns


measure


(1965),


fiscal


like


others


capacity,


sees


but


income


sees


as a competent


a confli


in not


changing


tax


base


to be


used


raising


educational


. 58)







is not administratively


feasible


use


personal


income


a measure of


local


tax-


paying ability
funds because


in opportuning


local


boards of


state


school


education


not have


power


to levy


a local


tax highly


correlated


with


personal


income.


Alexander


(1975)


reinforced Johns'


earlier


idea


when he


found


that


income on a


local


basis


had distribution


dis-


parities


among


districts


similar


to property


inadequacies


taxpayers,


local


especially


property


lower valued


taxes


single


have


family


residences,


express


increased dissatisfaction.


Many


studies


point


to a need


for more


encompassing


tax bases


other


than


property valuation and


income


sources of


fiscal


revenue


school


districts.


is evident


that


wealth


state


school districts have


been


truly


determined nor


tax base been


devised


to equitably


determine actual


wealth.


Substitute


Taxation Methods


Education


Local


real


property


taxes


have


been


limited


method


taxation.


It elicits negative


reactions


from over-


burdened


taxpayers and


can


lead


to false


assumptions


about


a local


area's


fiscal


capacity to support


education.


Thurow


(1972)


states


that


property


taxes


should


be abol-


ished


since


they


constitute only


one


form of wealth.


such,


they


bias


choices


among


alternative


investments


417).


The choices of


investment


in education or


physical







fiscal


capacity.


A more


accurate


determinant


fiscal


capacity would b

erty tax remains


e desirable but not

the major means of


as long

locally


the prop-


financing


education.


Farner


and others


, as noted earlier,


called


shift away


from local


property


taxation


to other


sources


revenue.


This does


not appear to


fiscally


beneficial


since property


taxes


produce a


large


amount of


revenue.


1975


ad valorem tax rolls


valued


Florida's


taxable


property


$91,767


million.


A maximum eight mill


would have raised


approximately


733 million dollars


Florida' s


schools


(Department of Revenue,


1975,


124)


Local


sources were


actually


accredited


with


raise


million dollars


in local


educational


revenue out of


total


billion


expenditures.


Cancellation


property tax without a


tax base


capable of


producing


similar


revenue


would be


financially disastrous.


Increased


tax equity,


would mean replacing


property


tLx with


entirely


different


tax system.


Redmon


(1976)


accurately


stated:


ess


some


additional
tax source


revenues can be


(s) ,


generated


which do not add


the regressive,


inadequately


responsive


revenue
exists,


structure


there


of Florida as


is neither


it presently


revenue nor the


rationale


implement t


a reduction


role


tion


property t
anv other


in financing public educa-


local


government


service.


. 15).







least


an equivalent


amount


revenue.


Different


studies


have


shown


that a


personal


income


could


easily meet


education


finance needs


and add


equity


to Florida's


present


tax system.


Due


(1976)


found


that


Florida


could


have


raised


992 million


dollars


from a


personal


income


tax


found


1973


286).


that Florida


Quindry


could


have


1976)


raised


in a

997 mn


later


killion


study,

dollars


from a


personal


income


78) .


This would have meant


that,


state


replaced


local


property


education with a


personal


income


tax,


Florida


would


have


raised


an additional


quarter


a billion


dollars


revenue.


Implementation


of a personal


income


tax


is not


viable


solution,


however,


to Florida's


educational


finance


problem.


Later


discussion


will


show


that


Florida's


Consti-


tution


prohibits


use


a personal


income


tax.


change


in Florida's Constitution


could


take


a considerable


amount


time


even


legislature


the majority


voters were


favor


passing


a personal


income


tax.


There


are


several


other


disadvantages


using


personal


income


tax besides


Florida


Constitutional


restric-


tion.


Gaffney


(1973)


states


that


income


is not more


index


to well


being


ability


than


is property


meaning


that neither measure adequately


estimates


fiscal


capacity.


He concludes


that because of


the current


income







that reliance on


personal


income as


indicator


fiscal


capacity


can


understate an


area


s actual


capacity.


The understatement would


inflate


effort


index.


Revenue effort


could appear


high while


actual


tax burden


low.


This


would


especially


true where


incidence was


shifted


to non-residents


where


high


corporate


income or


local


property


taxes


are


high


(pp.


326-327).


A personal


income


tax could be


a more


equitable and


productive


tax;


however,


implementation does


seem


imminent.


Other


taxes


are available


used


in Florida,


as well


as other


states.


Estate


taxes


have


been


used


assess


a person'


relatively


s lifetime wealth but


ineffective


since


this


is a one


time


has

tax


been

levied


rates,


and avoidable


through


wealth


transfer before


death.


used


Tangible


Florida.


personal

This ta


property


x would


levy


is not

taxes o


currently


n personal


property


such


as automobiles,


home


furnishings,


and


valu-


able


piece collections.


Other taxes,


such


taxes on


stocks,

stories

transfer


b


onds,


and notes


and machinery (cc

rs (documentary),


(intangibles


>rporate

are so


tangible)


urces of


, corporate


and


revenue


inven-


property

e. These


taxes,


however,


do not


generate


the needed


revenues


which


are


potentially


available.


No one


assesses


true


wealth


Florida and makes


it available


tax base.







into


Florida' s


system


there must


be at


least


a partial


substitution,


if not


total


removal


local


property


tax.


This cannot,


from past discussion,


be accomplished


in Florida by


use of


income


tax.


It is,


also,


necessary


to move


away


from


taxes


which


concentrate on


one


form of


wealth


to a


tax base which


covers


a broad spectrum


of wealth


in order


to more


accurately


assess


taxpayer


capac-


true wealth


state.


tax


that


can


effectively


efficiently


accomplish


these necessities


will


proportionally


relieve


those


taxpayers


less


able


pay,


shift


the cost


of education


those more abl


to pay,


tax those who


theoretically


benefit


the most from


education.


Wealth


Terminology


A wealth


tax is


referred


to by


(1960


as a


"net


worth


tax.


" He narrowly


defined


pertaining


to families


individuals.


Due'


definition


explained:


a net worth


is a personal


or direct


tax,


imposed
basis o


basis,


upon


their


individuals


total


that


families


personal


net


wealth, or
liability


outs


standing.


310)


identified


calculating wealth.


the components


The


that


should


included


land,


included


buildings,


personal


forms


of wealth


such


automobiles,


furniture,


jewelry


, etc.


It also


assessed


values


stock


bonds,


notes,


cash,


and bank


deposits


(Due,


1960,


310)








taxation


wealth


accured


companies,


assocla-


tions,


institutions.


Wealth


was


considered


to be


value


all


physical


financial


assets


, regard


ess


ownership,


minus


liabilities


Sandford


et al.


diff


erentiated


between


a wealth


other


taxes


inclusion


many


wealth


cases


, not


just


one


ase


and


emphasis on


assessment


of other


ses


taxes


value


gross


rather


values


than


their


respective


ses


The


wealth


tax


can


spread


burden


taxation


those


that


hold


more


than


one


type


of wealth


suC


property.


wealth


a powerful


redistributive


instrument.


instrument


Tait


to alter


(1967)


group


saw


and


wealth


individual


tax


as a powerful


relation


s in


society.


wealth


can


redistribute


wealth


to such


an extent


as to alter


an entire


society


Whil


wealth


ential


nee


not


use


such


extensive


results


In


ess


stic


form,


a wealth


can


be used


introduce


greater


equity


educational


finance


greater


shifting


amounts


Taxabl


burden


of wealth


forms


current 1


of wealth


not


those


who


hold


nontaxable


necessarily


forms


include


come.


Atkinson


(1974


diff


ere


ntiated


between


income


wealth


the distribution


He stat


In current


usage,


esse
_1


ntial


diff


erence


4-- r,4 tn _i rn -t r. r^ fly 1 -Iv


4-T. -, c


T-T/- 7^ 1 4- r


-i ^ *- -- /**1


_~I_~__


^ r-


T Tt"^


^ -







whereas


'distribution


receipts


assets


(and


accuring
from other


income


from


' refers


the ownership


sources


such


earnings)


in a given


period.


(1960


noted


several


advantages of


a wealth


tax


over


an income


tax.


First,


a wealth


assesses


items


unused by


income


tax;


second,


net worth


yields


greater


tax revenues;


total


third,


sum of wealth not


tax can be


just


margin


applied


included


income


tax.


estimated


that a


one


percent


tax


on wealth was equal


to a


20 percent


tax on


income


313-314)


Due's


points


are moot


however


since


income


could


not,


from previous discussion,


taxed


in Florida.


Personal


income was


used


this


study,


however,


to compensate


lack


information


available on


savings,


other


forms


taxable


accumulated wealth,


and,


show


revenue


that


would be available


was


used


There


has,


also


been


some disagreement


to whether


the wealth


should be


levied on


corporations


Peacock


(1963)


assets


pointed out


are


that


reflected


value


value of


of a corporation 's


shares.


shareholder


then


corporation


would be


double


taxation


389)


Atkinson


1974) ,


based


work


J.R.S.


Revel l, found


that


company


shares


were


under-


stated


in market


value by


as much as


p* cent.


assets of


I- .


.e companies


were worth more


than


corresnondina







Sandford


et al.


(1975)


stated


other


reasons


not


levying


a wealth


on companies.


They


felt


a corporate


would


discriminate


against


that


type


of bu


siness


organic


zation.


It would


dis


courage


business


that


needed


large


stocks


, and


more


xed capital,


with


slower


product


turnover.


They


argue


, also


, diffi


cult


to levy


progressive


wealth


tax


on a company


. 4)


estion


to what


should


included in


wealth


base


who


been


should


that


taxed


each


s still


country


open


decided


to discussion


what


It has


best


own


particular


situation.


This


possibly


best


course


take


implementation


of a wealth


tax within


United

a wealt


States.


tax,


In order


advantage


assess

s and


appropriateness


disadvantages


will


reviewed.


Equity


of a Wealth


Tax


Individual


economic


purchasing


power


, usually


based


ability


pay


Atkin


sonr


(1974


states


that


case


social


greater


stice.


equality


Equality


is premis


based


ed in


idea


principles


that


distribution


of goods


taxes


should


be equal


, unless


there


are


justifi


ed disequali


zations


, and


exis


ting


extreme


ine


qualities


are


not


justified


If this


is con-


sidered


to be


true, then


people


with


same


income


number


of dependents,but


with


different


amounts


accumu-







'phych ic


benefits'"


395).


Lord Kaldor


(1956)


relates


tale of


two men,


one a beggar,


the other


a Maharajah.


Neither man


possess


income or property.


The Maharajah


kept


his wealth


judged


taxing


form of


capacity


jewels and


income


gold.


, neither man


one


could


taxed


20) .


The Maharajah had


benefit of


financial


security


comfort


to his wealth


potential


while


beggar was destitute.


The mere


possession


wealth,


therefore,


can


give


psychic


and physical benefits.


(1960


stated:


The mere
a source
A basic


possession
of prestige
limitation o


of wealth, i
and feeling


income


itself,


sec


urity.


taxation, ....


tendency


who


have
315)


to discriminate against


not yet accumulated


those


persons
who have.


There


are at


least


two other


advantages


of a wealth


under


wealth


idea


can widen


of horizontal


tax base,


equity.


espec


First,


ially


taxing


income


included and


lessens


avoidance by


those


who would


have


invested


in non-taxable


securities


(Sandford et al.,


1975,


overall


Second,


progression,


a wealth


without adverse


can attain a


Soc


greater


ioeconomic effect


than


found


other


tax structures


(Due,


1960,


316).


philosophies


presented show there are


valid


reasons


a wealth


based


economic


principal


of horizontal


equality


Utility


Efficiency


of a Wealth


Tax


.~ .


. V







savings


consumption


that


marginal


benefits


from


from


a dollar


a dollar


savings


equals


consumption


marginal


(Thurow,


1972,


efits


418).


The


economic


principal


of marginal


utility


would


dictate,


their


before


, that


units


which


give


benefits


should


taxed,


not


just


one


particular


unit


such


income


or prop


erty.


Thurow


defined


an efficient


tax


system


as one


which


does


not


excessive


burden s


and


does


not


allow


to shift.


more


system


prevents


excessive


burdens


and


shifting, the


more


efficient


becomes.


Un-


fortunately,


present


structures


encourage


these


faults.


Thurow


present


s the


theory


that


in order


tax


struc-


ture


to be efficient


it should


consumption,


earnings,


physical


wealth,


leisure


(Thurow,


1972,


418-


419).


A wealth


could


easily


accommodate


theory.


Another


favorable


argument


an effi


cent


weal th


that


encourages


taxpayer


use


his wealth


productively


wealth


rather


regard


than


ess


hoard


income


A charge


production.


imposed


This


aspect


the wealth


tax


discourages


investments


forms


wealth


that


yields


no income,


such


jewelry,


pictures


and


stamp


coll


sections


It emphasizes


profit


motive,


taxing


high


field and


yield


assets


of equivalent


capi tal


value


same.


wealth


also,


does


not


discourage








7-9) .


This


fluid


turnover


assets


adds


to a healthy


efficient


economic


system.


A wealth


tax can help


reduce


disparity between


the wealthy


inefficient


used


poor.


and disequal


in Florida.


can


be used


effects


redistribution


to overcome


tax bases


of wealth


currently


could


greatly


aided by


certain


exemptions


to middle and


come


groups.


The wealth


tax can


be expressly


effective by


allowing


low tax


rates


at a


high


threshold while


still


generating


significant


Disadvantages of


a Weal


revenue.

th Tax


Various


arguments


against


implementation


wealth


tax


have been


posited.


One of


the major


arguments


presented


is opposition


to the redistribution


of wealth.


The basic


premise


this


argument


that


redistribution


will merely penalize


the wealthier without


providing


poor with any


shares


significant benefit.


to be benefited


There are not


(Atkinson,


enough


1974,


taxpayer who


wishes


to enjoy


has worked


hard all


socioeconomic


of his


position hf


life,

e has


and

attained


and wishes


to leave his


family


in a


worry-free


financial


situation,


which would


could be expected


endanger


to rebel


goalss.


against a


Government


government


interference


in workings


of a free market


borders on


socialism.


not,


however,


unreasonable


to project


tax


on wealth







thresholds,


more


equitable


tax


incidence on


those with


the greater


ability


pay.


A second


argument against a


wealth


is associated


with administrative difficulties.


The general


supposi-


tions


are


that


assessment of


various


forms


of wealth


too difficult and


that


a wealth


tax would make


tax-


payer


dishonesty


too


easy


and/or


too desirable.


Assets


that would allow under-reporting


or evasions are


jewelry,


pictures,


stamp


collections,


rare


books,


valuable house-


hold


possessions,


This would be


(Sandford


especially


true


et al.


, 1975,


different


12) .


branches of


government were responsible


for taxing


different


items.


Cross


checks would


problem area


be exceedingly


been


found where


difficult.


there are


Another


large closely


held


family


businesses


that


do not allow public


sales of


shares.


There


is no readily


determinable


value


that


can


be placed


the worth


the shares as


can be done with


those


listed


the different stock


exchanges.


A related


problem has


been


identified


with


time o f


assessment.


Stock


values


fluctuate


throughout


year making


one


price


stock a


possibly


detrimental


figure.


Also,


yearly


check


valuable


personal


possessions would require


extensive


costly


auditing


valuation


procedures.


Administrative


problems


have not been


as difficult


to solve


they


first


appear.


Thurow


(1972)


stated,








423) .


West


Virginia


and Missouri


are


states,


example,


which


currently


personal household


possessions.


cult and


developed a


Property


expensive.


workable


assessment


Florida,


property


admittedly


however


appraisal


diffi-


already


system which


is reviewed


to extend


every


its


four


current


years.


procedures


is conjectured


include


that


personal


property would not be overly


difficult.


Sanford


(1975)


suggested


that


valuations


be made


very


five


years


either


personal


commitment


or by professional


assessment


183).


In Norway, household


chattels


are ass


essed as


a certain


percentage of


insured home.


Similarly


stocks


could be


valued at


lowest


quoted or


average


quoted


price over


a given


period


time.


Thurow


(1972)


felt


that difficult


paintings,


television


value

sets,


items,


such as


furniture,


jewelry,

should be


treated


as consumer


durables


taxed


under tax


bases


other


than


wealth.


further


suggest


that


expensive


items,


such


jewelry,


paintings,


or valuable collect-


tions,


should


only


taxed


under


a wealth


tax,


when


their


value


exceeds a


given amount.


Such


items


could


easily


identified by


insurance


premiums


. 423).


A third


argument


against a


wealth


based


economic

tax will


assumptions.


force


It has


individuals


been


who


thcugqht


possess


that a


objects


wealth

value








tax.


The wealth


tax was originally


designed


to redis-


tribute wealth.


taxpayer


knows of


tax's


existence,


however,


he should be able


to adequately


plan


effect


(Thurow,


1972,


421) .


The wealth


tax has


been


shown


to cause a


shift


in consumption


expenditures


from durable


to nondurable


products.


emphasizes


investment


in economically productive


good

and


s


rather


than nonproductive


valuable collections


business'


investments


are not


risk


items.


Large cash savings


encouraged.


taking


Similarly


are encouraged by


a wealth


tax.


These encouragements


and discouragements


are only


wealth


related


supposedly


investments


gives


in nonhuman


incentive


capital.


to investments


human


capital


form of


education


which h


is nontaxable.


This,


theoretically,


sirable by most


generally


societies


(Due,


been considered


1960,


as de-


319).


Sandford


(1975)


pointed


that


a wealth


tax


is not


economically


inhibitive.


Some of


world's


wealthiest


countries,


each


with


own


unique culture,


possess


wealth


tax.


These countries are


Sweden,


Norway,


Finland,


Denmark,


Iceland,


Germany,


the Netherlands,


Austria and


Switzerland


30) .


These countries


prove


feasibility


using


a wealth


tax.


Florida may not


wish


use


high


rates


used


in many


these countries


for wealth


distri-


bution,


but


it should


consider


the equality,


efficiency







Summary


Florida's


fiscal


support


education depends


upon


financial


resources


from a


variety


tax bases.


Research


from the


National Education Association shows


that Florida's


tax effort does


not


in educational


enable


expenditure


to attain

s. This


the national


indicates


aver-


that


Florida


is not adequately utilizing


financial


capabil-


to develop


human


resources.


The major


source of


Florida's


educational


funds,


the


property


tax,


has been


shown


to be


regressive


equitable.


property tax is


not administered at a


uniform rate


taxes


among the


residents of


school


one


districts


school


and,


therefore,


district higher


than


residents of


added benefit.


another


The


school


district without


property tax has


been


proof


utilized


full


potential


nor


it been


altered


to relieve


tax burden on


those


least able


pay.


Florida's


tax system,


as a whole,


been


shown


be regressive


in nature.


Lile's


study


(1975)


found


that


families


the highest


wealthiest


in Florida


percentage of


families were


which had


that


shown


lowest


income


pay


incomes


taxes.


lowest


paid


The


income


taxes.


Florida' s


system needs


to be


revised


correct


inequities.


Research


studies


show


that Florida needs a


pro-







effort.


Since


Florida


cannot


legally


implement


an income


tax,


other


methods


are


necessary.


The


literature


points


to a wealth


as a productive


equitable


which


could


reduce


current


could


substitute


methods

altered


of property

to implement


property


tax.


assessment


utilize


Florida's


collection


a wealth


full


potential.













CHAPTER III


EFFECT OF


A WEALTH


TAX


ON FLORIDA


Determination


the Wealth


of Florida


Data


from various


state and


federal


agencies,


both


private


governmental,


were


not accurate


the degree


that one could


amount of wealth


absolutely quantify the


state of


actual


Florida.


dollar


Data


personal


property


associated with


individual


wealth were


not available; th

indirect measures


erefore,


those


estimates were made


various


based on


unattainable wealth


categories.


Minimal


information,


very


general


nature,


was available on


wealth classifications among


groups


of people at


various economic


level


inadequacy


this


information,


no wealth


impact


was


generated for these economic


levels.


State wealth was determined by


quantifying


different


wealth


components having monetary value


into


various


categories.


values were


aggregated


to obtain


total


state wealth.


categories of wealth were:


mobile


family


homes,


condominium and cooperatives,


residences,


non-agricultural


single


property,


agricultural


property,


pleasure


boats,


automobiles,







vacant commercial and


industrial


property,


proved commercial


industrial


property,


multi-


family


residential


property,


corporate


income,


corporate


intangible


property,


corporate


tangible


property.


about


Appendix A


source of


gives more detailed


the wealth categories.


information


Table


gives


actual


or estimated


taxable dollar


amounts


category.


The categories were divided


into one of


two divisions.


These divisions were labeled


private


(personal)


cor-


porate.


assignment of


the categories


to a


division


was


based


on Florida state governmental


agencies


estimate


of which division


contributed


the greatest


taxable amount


for

with


a particular

the componen


category. Table

t categories and


gives


the divisions


taxable dollar


amounts


available.


Estimates of


private wealth


cor-


porate wealth were calculated with


property


categories


broken


out


in order


that


property valuation,


as a percent


total


state wealth, could be


gives more detailed


information


estimated.


defining


Appendix B


various


categories.


The methods of


determining the


taxable dollar


amounts


of each


category varied.


Categories


through


through


and state agencies,


had monetary values


as stated


recorded by


in Appendix A.


county


Values







TABLE


WEALTH BY


SOURCE FOR FLORIDA


(PLUS


INCOME)


1974-75


TAXABLE PERCENT OF


CATEGORY


AMOUNT


STATE WEALTH


Mobile


homes


941,448,715


Condominium and


cooperati


ves


Single-family


residences


,731,312

,726,154


Non-agricultural


property


17,076,831


1.46


Agricultural


property


4,038


,959,096


1.84


Pleasure boats


Automobiles


Other vehicles


Private


,500


,553,500


,986,324


intangible


property


20,180


Personal


income


43,783


,000,000


Corporate


vacant


residential


6,146,526,463


2.80


Corporate


vacant


commercial


Corporate


1,661,176,179


improved


commercial
industrial


14,878,973,


Corporate


multi-family


7,666


,209,117


Corporate


income


3,603


,687,180


1.64


Corporate
property


intangible


30,501,545,000


13.37


Corporate


tangible


I ,1







TABLE


WEALTH
STATE


BY MAJOR
WEALTH 1


DIVISION


974


AND


(PLUS


PROPERTY
CONTRIBUTE


CONTRIBUTION 1
NG CATEGORIES)


TAXABLE
REVENUE


DIVISION


PERCENT OF


STATE


WEALTH


Private


Wealth


Total


31,145


,284,458


59.64


Categories


Private


Property


Contribu-


tion


44,800


,942,108


Categories


Mobile


Homes


Condominium


Coop


eratives


Single


Family


idences


Non-agri
Property


cultural


Agriculture
Property


Corporate
Categories


Wealth


Total


88,748,514,557


Corporate
tion
Categories


Property


Contribu-


,884,981


Vacant


Residen-


tial


Vacant


Commer-


cial
Improved
Commerce


and Industrial
Multi-family
Residences


Total


State


Wealth


$219,893,799,015








were


used


to bring


collected revenues


to one


hundred


percent


total


wealth


values.


Taxable


values


categories


lack


through


actual


had


available data.


to be estimated


The


due


value


pleasure boat


category was


obtained by multiplying the


average


cost of


a particular


length boat,


obtained by


dealer


estimates of


a boat


s value based


on a


year


depreciation


basis,


by the


number


of boats


registered


each


county


in Florida


The county '


average


boat


length


was


determined by


the number


dividing the


of boats


amount


registered.


of revenue collected


average


price


tag was obtained


where


tag price was


correlated with


boat


was


length,


then


total


aggregated


pleasure boat wealth


state


county


total.


Automobile and


other


vehicles wealth


values were


also estimated.


An automobile's value


was assessed by


issued,


which,


1974-75,


corresponded


size


automobile.


average cost of


a particular


size


car was


estimated


based on dealer


s recommended


prices


Blue Book values,


depreciated


on a


year


basis.


same


procedure was done


for vehicles oLher


thjan


cars,


which


included,


trucks,


mo torcyc 1


recrea-


tional


vehicles,


mobile


homes,


campers,


trailers.


More detailed


category


assessment


information


contained


in Appendix A.







contained


in Appendix D while Appendix C explains


abbreviated


category


titles.


Private wealth was


found


to be


$131,145,284,458


59.64


percent of


state's


total


wealth.


Corporate wealth was estimated at


$88,748,


514,557


or 40.36


percent of


stated


total


wealth.


Private and


corporate


property made


34.17


percent


total


state wealth.


State wealth did not


include


privately


owned


tangible


items


such


jewelry,


antique


collections,


paintings,


etc.


Thurow


(1972)


estimated


that


state wealth excluding


these


items,


would be


under-


valued by,

That


possibly,

portion of


five


: Flori


percent (

day's 220


423).


billion dollar wealth


which


is net worth cannot be well


documented without


change


present


informant ion


and data


system.


The


estimated wealth


clusion of


personal


Florida,


and corporate


also,


assumes


income and


current


valuation


single


family residences.


Alternative assumptions


about


Florida's


taxable


wealth


legality

wealth v

family r

Taxpayer


can be made


if homeowner


are to be accounted


ariations which


residences

equity c


equity


for.


include


Table


the exemption


and/or the exclusion


would


and/or tax


shows different


single
I*


of persona


be met more effectively


I


income.


exemptions


were


allowed


homeowners net


wealth


a certain


amount,


i.e.,


$50,000.


Tax data are not currently


available on







TABLE


VARIATIONS


OF TOTAL


AND


NET


WORTH


ESTIMATED


ASSUMING


A 20%


LIABILITY*


TOTAL


WEALTH


VARIATIONS


WEALTH


NET


(BILLIONS


WORTH WITH
LIABILITY


Total

Wealth
Family


Wealth


Wealth

Excluding


Resident


Exc


Single


ces


luding


$190


Personal


Corporate


Income


$172


Wealth


Exc


luding


sonal


Corporate


Single


Family


Income
Residen


ces


$143


$114


*Amounts


rounded


upward


next


million.







that


poor


middle


class


homes


(Table


are


less


valuable


the


than


financial


homes


obligation


more


wealthy.


of a wealth


could


Meeting


more


diffi


cult


those


possessing


little


wealth


other


than


eir


homes.


Table


shows


effect


of excluding


income,


single


family


res


iden


ces


assumes


a 20 percent


liability


figure.


billion


wealth


in wealth


would


still


or generate,


amount


a one


percent


rate,


.144


billion


in revenue.


about


that


would


raised


erated


would


above


a personal


the amount


income


tax


in Florida


dollars


gen-


as calculated


(1976)


or Quindry


1976)


The


implementation


of a wealth


would


require


readjustment


of Florida


s present


tem.


taxes


contributing


state


s General


Revenue


Fund


local


real


property


taxes


would


have


to be altered


in a


tax


system


that


would


prohibit


double


taxation.


General


Revenue


Fund


would


have


to relinquish


tax


source


which


actually


includes


tax


wealth


categories


such


intangible


tax,


corporate


income


tax


, and


estate


tax.


The


ost


revenues


could


regained


, with


revenue,


wealth


tax


were


to be tunneled


through


the General


Revenue


Fund


Tabl


detail


effect


a wealth


tax







TABLE


AMOUNT AV
IN 1974-75
WEALTH T


AILABLE
WITH T
AX AND


TO THE


HE
THE


GENERAL


INCLUSION
DELETION


REVENUE


FUND


OF A ONE PERCENT
OF ESTATE, AND


INTANGIBLES


TAXES*


REVENUE


FUNDS


AMOUNTS


Total


General


Revenue


Fund


.209


Billion


Minus


Intangibles


Estate


Tax


Tax


34.3


.146


Million
Million

Billion


Plus


Wealth


ers


Tax


onal


at 1% Excluding


Corporate


Income


and


New


Plus


Single


General


Wealth


Family


Revenue


Tax


Residences


.144

.290


Fund


1% Exc


Billion

Billion


eluding


ers


onal


Corporate


Income


.380


Billion


New


General


revenue


Fund


.526


Billion


*Amounts


rounded


upward


to next


million







only


annual


tax


amount


$53,491,539


would


have


been


required


however


since


one


time


mortgage


recordation


assessment


need


be included


estimation


wealth


of Florida.


General


Revenue


Fund


would


Sharing


initially


Trust


Fund


loose


28,429,796


Counties


would


while


loose


Revenue


25,061


Senate


Ways


Means


Committee


, 1976,


Class


non-recurring


of $


18,985,447


could


totally


des-


ignated


Revenue


Sharing


Trust


Fund


Counties


to help


cover


loss.


new


General


Revenue


Fund


created


in Table


could,


also,


contribute


a designated


amount


revenue


back


counties.


The


estate


$34,294,004


would


also


be deleted


from


the 1974-75


General


Revenue


collections


,209,093,867


(Lewis,


1975,


The


majority


local


property


valuations


would


consolidated


wealth


collected


state


level


tribute


proceeds

General


Revenue


wealth

Fund.


tax

The


were

1974


to be

real


con-

prop-


erty


tax


roll


available


school


taxation


amounted


,274,735,915.


Property


taxes


contributed


,178


the


total


local


kind


ergarten


through


grade


contribu-


tion


to education


(Comniss


loner


of Education,


1976,


. 10-11).


The


wealth


tax,


with


exc


lusions


rec


orded in


Table


could


have


raised


.144


billion







1974-75


property taxes.


Additional


revenue,


$1.380


billion,


could have been raised with


inclusion


single


family


residential


valuations.


Expenditures


K-12


1974-75


were


$1,885


,981,568.


Education received


54.4


percent


the General


Revenue


Fund


to meet


revenues


that


this


could


need


1974-75.


have been


Table


generated


reveals


from


the new


General


Revenue Funds


(2) ,


shown


Tab le


revenue generated without


inclusion of


single


family


residences


falls


96 million


dollars


short


funds


needed


to meet


educational


expenditures of


$1.886


billion.


A property


levy


of approximately


18 mills on


property valuations would


be necessary to meet


needed


revenue.


would be


alternative method of


to raise


meeting


percent allocation


the deficit


education


from


the General


Revenue


Fund.


either


case


shift


to a wealth


tax would


have


increased


tax equity


dimin-


fishing


local


property


taxes.


The


inclusion


single


family


residence


values would have


raised


an excess


amount


for the General


Revenue Fund.


Tax


equity would


be greater


with


single


family


residences


excluded but some equity


could


have


been


attained by providing


mill ion


excess


a rebate


to less wealthy


homeowners.


rebate could


be provided


homeowners who


fall


within


a determined


income


category


that would be expected


to have


trouble







TABLE


EXPENDITURE
REVENUE


FOR
FROM


K-12
NEW


SCHOOLS
GENERAL


IN 197
REVENUE


4-75


AND


FUNDS


GENERATED


TO REDUCE


OR REPLACE


EIGHT


MILL


LOCAL


PROPERTY


TAX*


AMOUNTS


Total


Schools


Current


from


Expenditures
11 funds in


K-12


1974-75


.886


Billion


54.4


Fund


with


Personal


Percent


of State


Percent


Corporate


Gene


Wealth
Income


Tax


Revenue
excluding
Single


Family


Res


iden


ces


1.790


Billion


Deficit


96 Million


54.4


erce


nt of State


General


Revenue


Fund


with


Percent


Wealth


Tax


Excluding


sonal


and


Corporate


Income


.918


Billion


Additional


Funds


32 Million


*Amounts


rounded


upward


to next


million







the national


average.


Calculations done


in dif-


ferent


studies


(National Education Association,


1975a;


Sparkman,


1975


reviewed


in Chapter


that Florida


would


have had


to raise between


$200 million


400 million


dollars


to achieve


the average


national


educational


effort


1974-75.


ass


umed


that


state


wishes


raise


an additional


00 million


education


substitute


local


valorem


tax with a


one


percent


wealth


tax,


through


then an alternative

the General Revenue


A feasible


alternative would


funneling


Fund must be


the wealth

used.


to earmark


funds


raised by


the wealth


education.


This


could be


done by


legislative act,


which would negate any


local


discretion.


wealth


tax could


be levied and


collected


local


level.


The General


Revenue Rund


could


release


overlapping


intangibles,


estate


taxes


inclusion


the wealth


tax.


This would mean more efficient


collection


those


taxes


local


level.


transfer


taxes would


take


approximately


$62.7


million


from the


General


Revenue Fund.


The General Revenue Fund,


turn,


could make


this


loss


by reducing


contribution


K-12


school


program by


a similar


amount.


Table


shows


revenues


that


would have


to be obtained by


wealth


tax and alternative ways


The wealth


tax could


to acquire


easily meet


them.


requirements







TABLE


1974-75
PROPERTY


REVENUE


TAX


NEEDED


FUNDS,


AND


TO REPLACE


ADD


GENERAL


MILLION


REVENUE


FOR


PUBLIC


FUNDS,


SCHOOL


EXPENDITURES


COMPARED


TO REVENUES


GENERATED


BY A 1%


WEALTH


TAX


REVENUE


NEEDED


AMOUNT


EXCESS


Revenue
General


d from


Revenue


Fund


Million


Substitute


actual


funds


raised by
Property


1974


Tax


.0 Million


Additional


mee


funds


average


need


national


education


expenditure


eve


Million


Total


funds


needed


Million


REVENUE


GENERATED


wealth


revenues


with


liability


exc


corporate


luding
income


per


sonal


minus


single


family


res


iden


ces


.144


Billion


$199


Million


1% wealth
liability


revenues


exc


corporate


eluding
income


with


per


sonal


plus


single


family


residences


.380


Billion


Million







to a


specific


source which


would


prove


inadequate


future due


not be accurate


to shifts


this case.


economic


The wealth


indices would


tax would be


responsive


to a


growing


base.


The


source,


could be argued,


would be no


less


arbitrary


limiting


than


present


legislative allocation methods.


essence


this


alternative would


substitute


the wealth


present


inequitable property


taxation method


sustain a more


adequate


support


education.













CHAPTER


FISCAL


CAPACITY
BY WEALTH


OF SCHOOL


COMPONENTS


DISTRICTS


AND


AS MEASURED


PROPERTY


fiscal


capacity


school


districts


differ


when


measured


wealth


components


as opposed


taxable


property


ment


valuations.


a county


obtaining


true


may


total


picture


be argued


wealth


fiscal


that


best


capacity,


assess-


method


since


accounts


show


most


financial


comparisons


components


of each


county


Appendic


s percentage


the state


wealth


totals


categories,


respectively,


with


without


personal


income


but


including


taxed


corporate


income.


Table


summarizes


fiscal


capacity


comparisons


and


variation


a percentage


of wealth


large


small


school


districts


in comparison


fiscal


capac-


cities


based


school


distri


' actual


nonexempt


property


values.


exempt


Appendix


property


G contains


values,


school


percentages


district


total


non-


school


districts


' assessments,


rankings


state.


Wealth


figures


nonexempt


percentages


in Table


property


of actual


showed


percentages


nonexempt


that,

used


prope


whether


compared


study


values,


Brevard,


Broward,


Dade,


Orange


school


districts


showed














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oB ^
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^^







fiscal


capacities when


property measure


is compared


fiscal


capacity


Five of


created by


selected


small


the wealth


school


tax base.


districts had


overstated


fiscal


capacities


as measured by property


valuations.


Union


school


district showed a


lower


relative


fiscal capacity when


the percentage of


property


assessment


is compared


percent


the state


total


wealth


plus


income.


Gadsden


school


district had an


understated


fiscal


capacity when


compared


the wealth


measure of


fiscal


capacity.


The misstatement of


school


district's


fiscal


capacity


can make


large differences


in dollar amounts.


The wealth


tax estimates of


property values were,


a school


generally,


very


district's

similar to


nonexempt

the


school district


s actual assessment when


viewed


as per-


centages


state's


total nonexempt


property value.


Additionally


trict' s


derived revenues


nonexempt


based


property values,


school


as a


dis-


percentage of


state


total,


would create an


unjustified extra


burden on many


counties


compared


school


dis-


tricts


revenue


responsibility,


as calculated by the wealth


tax percentage.


An example of


extra burden


can be


found


state desired


to raise an additional


$300


million,


1974-75,


in an attempt


to meet


the national average


financing


schools.


If each


school


district was







Broward school


$40,152,000.

percentage of


to only


districts


Broward's


total


$33,345,000.


would have had


on percentages of


district would have


contribution,


state wealth,


Sixty-two of


smaller con

state wealth


total


raise


if based


would have


state's


tributions


than


amounted


school


based


contributions


based


on school


district


percentage of


total


state


taxable


property.


to raise


the other hand,


19,749,000


under the


Duval


wealth


would have


percentage


versus


$14,346,000


Fiscal


capacity


under


property percentage.


as revenue per ADM and


capital


as a percentage of


state


totals


per ADM and


per


capital change


substantially


school


Table


districts'


8 give


revenue


estimates of


picture


average


revenue raised


school


districts'


taxable


property


values,


ADM and


per


capital


units,


along with


respective


Appendix H


percentages of


contains


school


average


state amount.


property/ADM and per capital


districts


along with


values


percentages


state averages and rankings within


state.


Table 8


also


shows


per ADM and


per


capital revenue


that


could have


been


raised


a wealth


tax,


category without personal


income,


including


taxed


corporate


income,


along with


total


wealth


percentages of


state average.


Appendix


contains


wealth/ADM and per


capital


values


each


then








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percentages


differ noticeably


property values


of both wealth and


from


total


taxable


school district's


wealth


property


total


percentages derived


in Table


percentages


still


show


greater


average


state


percentages


from


taxable


property values


school


districts with


overstated


fiscal


capac


ity when


compared


to average state


percentages obtained


from per


ADM


capital


wealth measures.


large


school


districts


of Brevard,

average per


Broward,


Dade,


-centages


and


ADM and


Orange

per c


apita


greater

from p


state


property


than would have


been


found with wealth.


Duval and


Hillsborough,


uoth


of which had


understated


fiscal


capacities,


showed


lower


state


average


percentages


capital and


per ADM,


through


taxable property value


than


they


had by wealth assessment.


The small


school


tricts, with


greater


relative


exception

fiscal


Gadsden,


capacity


generally


property


showed


assessments


were used


capacity


base.


variation between


school


districts'


total


wealth


percentages and wealth


percentages


ADM and


capital


are


less,


overall,


than


the difference between


school


districts


' total


property percentages


property


per-


centages


per


ADM and


capital.


The


large county


school


districts,


shown


in Table


possessed more congruent


wealth percentages p


ADM and


capital


than did







County


per

but


school


ADM when

the wealt


district has


compared


a lower wealth


percentage


to property percentages per


percentages per


ADM


ADM,


fall more closely


the wealth measure


per


ADM of Hillsborough


and


Duval.


counties.


A similar


Glade'


situation


found


percentage


ADM


among


tends


smaller


regress


toward


The


percentages of


taxable


the other


school


property percentages of


districts.


state


average


showed


that


richest


school


district,


Martin,


possessed


8.726


times


fiscal


capacity


poorest school


district,


Gadsden.


per


ADM wealth measure


reduced


fiscal


districts


capacity variation between


to 6.399.


school


wealth ADM percentages of


state


average


shows


the wealthiest


school district,


Martin,


fiscal


capacity


only


7.290


times


greater


than


poorest


Using


taxable


school


district,


property


Baker.


capital,


richest


school


district,


Collier


had


11.332


times


fiscal


capacity

fiscal c


poorest


capacity per


school


capital


district,


variation


Union.


dropped


The


when


wealth measurement


was


used.


Wealth


percentages of


state


average


showed


the wealthiest school


district,


this


time Flagler,


poorest


fiscal


only


school


capacity


.888


district,


between


times


again


Union


fiscal


Union.


Collier


capacity


The disparity


lowered







An analysis


of percentages can be


somewhat mis-


leading


terms of


revenue.


Fiscal


capacity


as a


percentage of


state wealth


ADM and


capital


was


lower


among


school


districts


than


were


fiscal


capacity


percentages


of school


districts


as measured by


property


ADM and


capital.


The wealth measures


ADM


per


capital would have


raised more


revenue,


however,


than


property measures


per


ADM and


capital.


Table


shows


the Martin


school


district


as having


the greatest


fiscal


capacity


both measures,


property


wealth.


Martin


s average of


property


ADM


241.7


percent


state average while


its wealth


ADM


183.0


percent


state


average.


In actual


dollar


amounts


however,


Martin had


ADM and


the capacity


$128,051


to raise


210,032


under property


under wealth


ADM.


Martin, theru


fore,


under


the wealth measure of


fiscal


capacity


ADM,


1.640


times


fiscal


capacity


generated by property


ADM.


poorest


similar

school d


comparisons


district,


are made


from Table


as measured by wealth


ADM,


Baker,


poorest


.964


school


times


district mea


fiscal


sured by


capacity


property


ADM,


Gadsden.

times gr


Union


:eater un


would have had a f

der the wealth mea


fiscal

sure


capacity


1.999


ADM than


actually


under


property valuations


ADM


large


school


district,


such


as Hillsborough,


would


have


_ ___







capital


figures


show


that


more


revenue


could


have,


again,


been


obtained


through


a wealth


tax.


Wealth


per


capital


measures


fiscal capacity


have


a similar


relative


school


impact

strict


that


fiscal


of wealth

capacity.


per

The


ADM


measures


school


strict


with


the


greatest


per


capital


wealth


measured


sca


capacity,


Flagler,


.568


times


fiscal


capacity


the wealthiest


per


capital


prope


means


ured


fiscal


capacity


, the Collier


school


strict


The Union


school


distri


had


east


fiscal


capac


under


both


prop-


erty


wealth


measures


It had,


however,


a fiscal


capacity


times


greater


under


per


capital


wealth


measure


than


under


per


capital


property


measure.


Rankings of
Wealth


the School


Base


Corre


tricts


lations


The


school


districts


showed


variations


in rank


among


Florida


school


districts


among


diff


erent


measures


fiscal


capacity


Appendix


H contains


school


non


-exempt


property


in per


capital


per


ADM


rankings


Appendicies


J and


K show


rankings


school


dis-


tricts


total


wealth


va lue,


wealth


per


ADM


per


capital,


with


and


without


personal


income,


res


pective


Tabi


shows


example


various


rankings.


A wide


variation


exists


between


the rankings


measures


total


non


-exempt


property


wealth


and


measures


non-












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rH( r-


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r- N in
rHr4 L


HIr-I


r-1M rS* FQ <







Brevard


ranked


llth


among


sixty-seven


school


districts


of wealth.


total


A wide


property

variation


valuation


was


found,


total


however,


amount

when


property


rank


per


capital


ADM


was


compared


total


property


value


rank


Brevard


moved


from


llth


total


property


rank


to 40


in property


rank


ADM


property


rank


per


capital.


Similar


results


were


found


when


total


wealth


rank,


was


compared


to wealth


rank


ADM,


43, and


wealth


rank


capital,


the


larger


school


districts


ranked


lower


when


property


wealth


per


ADM


and


per


capital


state


rankings


were


compared


total


property


and


wealth


state


rankings.


The


selected


capacity


and


small


state


school


ranking


districts


when


showed


property


greater


wealth


fiscal


ADM


and


per


capital


measures


were


used


compared


total


property


and


wealth.


Flagler


s total


nonexempt


property


rank,


total


wealth


rank


without


income,


changed


from


relatively


positions


state


high


positions


state


according


to rankings


attained


property


per


ADM,


, and


per


capital,


, and


wealth


ADM,


and


capital,


Martin


Collier


school


dis-


tricts


were


rank


among


middle


school


districts


total


property


wealth


measures;


however,


they


turned


to be


chest


school


distri


ADM


capital


measures.


Escambia


appeared


to be


well







terms of


property


and wealth,


capital and


ADM.


Among


smaller


school


districts only


the Glades


School


District rose


from low total


property


and wealth rank


position


to high


property


and wealth


rank


ADM and


per


capital


positions.


All


smaller


school


districts,


except


Union,


rose


fiscal


capacity when measured


per ADM and


capital


units.


Union remained


uniformly


poor using


all measures of


fiscal


capacity.


Wealth measures among


large


small


school


districts


across categories

categories measured


tended


to be more


in terms of


uniform


property.


than


fiscal


Duval


School


District


fluctuated


from


sixth richest


district,


terms


total


taxable property,


37th by


property values


ADM and


sures

school


48th


in property values


placed Duval

district.


the position of


The wealth ADM and


capital.


the

per


The wealth mea-


4th wealthiest

capital measures


showed Duval


to still maintain wealthy


rankings of


18th


per


ADM and


13th


for wealth per


capital.


The Dade County


School

sures o


District

f fiscal


fluctuated

capacity;


from 1

however


property mea-


the wealth measured


found


Dade


to be


lower


than


8th wealthiest


school


district.


In most instances


the wealth measures


large


school


districts were more


uniform than


property measures.


similar


situation was


found


to exist


among


smaller


school


districts.


property


ranking variations were


as dis-








28th


while


wealthier


wealth


than


44 th.


measures


Lafayette


showed


was


Gilchrist


shown


to be


to be 19th


among


per


28th.


school


capital


Among


districts


wealth


list


in per


measure

of other


capital


placed

school


property,

no higher


while

than


districts


uniformity


measures


was


not


found,


except


in Franklin,


since


other


to show


few


school


wide


districts


variations


were


that


specifically


did


listed


occur.


school


districts,


under


other


category,


wealth


measures


reinforced,


in almost


every


case,


fiscal


capac-


found


property


valuations.


It would


be reasonable


assume


from


data


on most


school


districts,


both


large


and


small,


that


wealth


measures


fiscal


capacity


are


more


uniform


and


are


a more


accurate


assess-


ment


school


The


components


district


used


s' true


fiscal


to estimate


capacity.


fiscal


capacities


school


districts


wealth


state


were


correlated


individually


various


combinations.


Spearman

component


Correlation


Coefficients


combination.


were


Appendix


calculated


L contains


each


correla-


tions


obtained


with


personal


and


corporate


income.


Appendix


M contains


correlations


without


personal


income


but


eluding


taxed


corporate


income.


The


total


wealth


state


was


found


to correlate


significantly


with


com-


ponent


combinations


of components


.0001


level.







Total


wealth


without personal


income


correlated


highest


with


corporate and


private wealth


totals minus


single


family


residences at


Total


wealth had


.99876.


lowest correlation with agricultural


property


(.49788) ,


non-agricultural


property


.54952)


vacant commercial


lowest correlations were


industrial


still


property


significant,


.67883).


however,


.0001


level.


Correlations


lowered


slightly


among


some cate-


gories


but a


very


similar situation was recorded when


total


wealth


was


correlated


with


each wealth


component and


com-


binations


excluding personal


income.


Non-agricultural


property,


agricultural


property,


vacant


commercial


and industrial


property were


the wealth


components with


tions with


tion among


lowest,


other wealth


wealth


still


significant,


components.


components was


lowest


found


correla-


correla-


to be between


agricultural


property


assessed amount


for private


co-operatives


condominiums.


These


two


sources of


tax-


able wealth


correlated at


.31782, significant


.0088


level.


Among


three


low correlation


categories,


highest


correlation was between


taxable amounts


corporate property


vacant


commercial


industrial


property

cultural


.75970


property


significance at


correlated no


higher


.0001

than


eve


.64937


Agri-


with


taxable amount


of private real


property


excluding


single







which


encompasses


busin


ess


equipment


inventory.


Most


other


correlations


between


categories


wealth


were


quite


high


shown


Appendix


lower


correlations


among


mos


t categories


with


agricultural


non-agricultural


prope


tends


to reinforce


findings


of A.


Alexander


(1976)


on negative


correlations


between


agricultural


residential


property.


These


negative


correlations


between


private


owned


residential


property


industrial


property


agricultural


non-


industrial


property


points


to disparate


measures


fiscal


capacity.


It does


not


seem


to be sound


policy


to base


a major


method


of educational


finance


on one


non-uniform


method


of fiscal


assessment.














CHAPTER V


LEGAL ASPECTS OF


A WEALTH


TAX


state of


Florida


holds


certain


types


taxation


illegal


under


state Constitution


statutes.


A major


prohibition within


Constitution


state


the state of


is on


Florida,


an income


Article


tax.


Section


a)(1968)


states


tax.


. .upo n


income of


natural


persons who are


be levied by


residents or


state or


citizens of


under


state


authority


shall


16-c)


This


constitutional


mentation


a weal


prohibition

th tax with


would negate


state of


imple-


Florida


wealth


essary,


was


to be solely


therefore,


identified


to legally


income.


interpret wealth


nec-


to be


out-


side


personal


income


prohibition.


Florida' s


Constitution and


Statutes


The


state has


been


given


a wide,


flexible


range


long


classified areas of


taxation


are not


unreason-


able,


arbitrary,


unrelated


involved


legislation,


discriminatory


among people of


similar


circumstances.


Gray


Central Florida


Lumber Company,


1932;


State


Miami


Beach,


1970).

as held


The state

in Stewart


legislature has


Daytona and


sole

Smyrn


power


Inlet


taxation

District







Pullman


Company


Knott


(1915)


Found


that


the


nature


and


extent


of the


could


be determined


legislature


as long


state


constitution


was


violated.


The


power


to levy


tax,


however,


mus t


be by


legislation


which


turn


esignates


obligation


pay


Stewar t


Daytona


New


Smyrna


District,


1927


State


ex.


rel.


Seaboard


Gay,


1948).


The Constitution


state


Florida,


Article


, Section


1(a) (1969)


provides


that


shall


levied


except


in pursuance


16-c)


Amos


Mathews


(1930)


stated


that


legislature


could


legally


enact


tax


that


violate


state


or federal


Constitutions.


are


When it

required


comes


to interpreting


look


a reason


tax


statutes


to uphold


the

tax,


courts


Tyson


Lanier


(1963) ,


rather


than


defeat


statute.


courts


are


pass


statutes


that


have


only


fair


and


equitable


burdens


those


affects


as found


Owen


Eheney


(1970) .


basic


purpose,


stated


Korash


Mills


1972) ,


taxation


should


cause


proportional


taxpayer


sharing


government


expenses


with-


out


unfair


burden


caused


avoidance


of payment


others.


Taxes


may


be classified


into


different


categories


which


generally


related


to property,


people,


or privileges


(Am.


Jur.


2d State


Local


Taxation,


Section


19) .








authorize


tax regulations


and exemptions.


Lummus v.


Florida


Adirondack School,


Inc.


(1934)


found


that,


generally,


forms of


privately


owned property were available


taxa-


I i on


to support and maintain


the government which


lends


said


property protection.


Constitutional


and Statutory
of a Wealth Ta


Implications


A major method


taxation which


state cannot enact


or control


of Florida,


tax on


Article


income.


(1885)


The Constitution


expressly prohibits


state


taxation


any resident's income.


Income


is divided


United States Code


(1964)


into gross


income,


adjusted


gross


income,


taxable


income.


Gross


income


included all


income


from,


is not restricted


service compensation,


gross


business


income,


profits


from property,


separation


interest,


payments,


rents,


annuities,


royalties,


life


dividends,


insurance


alimony


income,


pensions,


income


from indebtedness discharge,


partnership


gross


income,


and


income


estate


interest


or trust.


Ad-


justed


gross


income


included individual


gross


income minus


business


deductions


for business expenses,


employees


busi-


ness expenses,


losses


from property


long


term capital


gains.


Taxable


income


further


defined as


adjusted


gross


income


excluding


standard deductions


personal


exemptions


(pp.


4988-4989)







authority


defined


income


a gain
money


or recurrent


that


amount


time.


derives
of such


(Merriam


benefit


from
gain


Company,


usually


capital


rece


ived


1976,


measured


or labor;


also


in a period
581.)


In Keasbey


Mattison


Roth


esies


(1943)


was


found


that


"income


been


uniformly


restricted


a gain


profit


United


derived


States


from


Supreme


capital,


Court


labor,


concurred


or both"


this


. 894


definition


Commission


Internal


Revenue


Culbert


son


(1949).


The

several


Florida

cases.


Supreme

In State


Court ha

ex. rel.


helped


McKay


define

. Keller


income

(1939)


where


City


Tampa


tried


to levy


license


on pro-


fessional


persons


their


profits,


court


held


that


such


tax


would


an income


because


it related


product


or income


from


property


or business


sources.


These


were


not


only


sources


from


which


taxable


income


could


be derived,


but


court


exc


luded


those


sources


which


did


contain


income


taxation


characteristics


with


"implicit


assumptions


use


in common


speech,


assumptions


being


determined


intent,


subj


ect


matter,


character


of Polk


those


County


involved"


Jenkins


542).


(1969)


Fire


upheld


District


the right


state


impose


taxes,


other


than


those


prohibited


legislative


enactment.


Taxes,


therefore,


ch do


possess


characteristics


income


can


imple-


Tfln C f 4-








income


on wealth


made


up of property


or monetary


invest-


ments


(Duluth-Superior


Dredging


Commissioner


Taxation,


1944;


Department


of Treasury


Indiana


Crowder,


1938


Gallagher


Butler,


1964).


In Angell


City


Toledo


(1959),


court,


in quoting


from


Cooley


on Taxation,


Edition,


Section


when


differentiating


between


income


wealth


income,


stated:


In its


ordinary


amount


of actual


popular
wealth


meaning
which c


income


omes


person
income


during


tax


property


a given


is one
an occ


riod


levied


upation.


time.


income


It i


from


s a


thing


special


rather


called


than


income.


a general


a
138).


tax


The


court,


in Humble


Refining


Calvert


(1972),


found


no single


constitutes


authority


income.


comply

court,


definitive


on limiting


on what

definition


income,


stated:


Income
goods,
during
consid
comes


various


services


a definite


ere


during


distinguish


esc


, prope


period


money


a definite


ed from


capital


flow


or other


time.


or money's
time. It


which


wealth
It may
worth


is a


which


to be
fund


wealth
Income
628-631
inflow


at a particular


ax, Ency
(1932).


cons


clop


tituting


time.


edia


essence


an accretion


Citing


Social
income


Seligman,


sciences,


to wealth,


identifiable


worth


though


and
not


measurable
necessarily


in money
in cash


money
. 929)


implicit


these


rulings


that


income


wealth


differ


because


involvement


time.


Traditionally,


income


been


determined


taxed


in a certain


period


. I U








I







The Consittution of


state of Florida,


Article


Section


5(b) (1968)


was


altered so


income of


corpora-


tions


could be


taxed.


No change


tax personal


income


can


be expected

however, ca


without major


n be taxed based on


conflicting with


the Florida


legislative conflict.


legal


Wealth,


definitions without


constitutional


prohibition


on income.


All


property


held by residents of


the state of Florida,


except


those


properties


legislated


exempt,


is subject


taxation.


This


was


held


to be


case


in Bush


State


(1939)

actions

Statute


personal


for property

. Personal

s Section 19


property,


used in

property


2.00(1)


inventory,


inte


state or foreign

been divided by F


into household


tangible


goods,


personal


trans-


lorida

intangible


property.


wealth


includes


four


classifications


per-


sonal


property.


The wealth


tax would


include


full


value


assessment of


inven tory


as defined by


Florida Statutes


Section


192.001(11) (c).


statute


states


that inventory


included


sale or


goods,


lease.


wares,


This


and merchandise of


authorized


a business


on businesses


addition


to corporate


income


stock


certificate


taxes.


The wealth


tax also


included


intangible personal


property


as defined


in Florida Statute Section


192.001(11) (6),


which


encompasses


values of


stocks and bonds,


and


tangible


personal


property


as defined


in Florida


Statute Section








and which


carry


their


own


value.


Tangible


personal


property


does


include, however,


household


items or


transportation


vehicles.


Household


items


cannot be currently


taxed


under


Florida


Statute Section


192.001(11) (a)


which defines


household


goods


as any


furniture,


appliances,


wearing


apparel,


ordinary


household items


used


owner


family


comfort but


ex-


eluding


any household items


used


for resale or


commercial


purpose.


The proponents


a wealth


tax may


find


it more


beneficial


to leave


this


prohibition


force since


items


excluded would be


of relatively minor


financial benefit


and difficult


assess


except by


individual


self


assessment.


A more


serious


prohibition


financial


valorem


implication

taxation on


is encountered by


motor vehicles,


boats,


airplanes,


trailers,


trailer


coaches,


and mobile


homes by

Section


the Constitution of


1(b) (1968) .


The vehicles


state of


are


Florida,


subject


Article


license


taxation based


size,


power,


or other methods


of classifi-


cation but not


basis


their


current full


value.


Under


the current


license


process


it would be


possible


to obtain


tainted


partial


under


reven ue


tax assessment on


but not as much as would


full


be ob-


valuation.


A wealth


tax has


been


shown


involve


articles


of worth


income.


current Florida


therefore,


Constitution.


not


The wealth


prohibited


includes







exclusions


do not prohibit a


wealth


tax from being


imple-


mented.


tax but


They


they


do affect


can be


revenue


legislated


potential of


to minimize


a wealth


any negative


effect


A wealth


tax is,


therefore,


legal


state


of Florida.