For three decades, Florida has offered insurance companies a highly effective, performance-based tax credit that has resulted in tens of thousands of good jobs being created or imported to our state. Not only does this credit bolster our state’s economy in a transparent, accountable way, it also helps ensure insurance rates for Floridians stay as affordable as possible.
Senate Bill 378 by Sen. Anitere Flores would bring that to an unfortunate end. It would repeal tax credits available to insurers as a way to lower the communications services tax currently levied on telecommunications, video, cable and satellite television and other related services.
Cutting one tax but increasing another is a bad trade that would do more harm than good. It would eliminate tax credits that have been working exactly as intended and sets a bad precedent for other businesses considering a move to Florida based on the availability of similar tax credits. Importantly to consumers and businesses, it would amount to a $300 million tax increase that could translate to higher insurance rates for everyone.
The insurance premium tax credits allow insurers to deduct 15 percent of the employee salary for each job they create or import to Florida from the premium tax they pay each year to the state. For taxpayers, the essential fact is this: Insurers only get the credit if they actually create or import a job. They don’t get a credit for a mere promise of creating jobs. And if the insurance company eliminates the job, they lose the credit.
An independent evaluation of the tax credit in 2013 found it had led to the creation of 40,000 insurance industry-related jobs since 2008 – a tremendous return on the state’s investment. In other words, while many industries were being hit hard and laying off workers during the Great Recession, the insurance industry in Florida was able to create good-paying jobs for Floridians.
Since the recession, Governor Scott and the Florida Legislature have strongly focused on job creation and strategies that promote economic growth in the state. Unquestionably, this credit has contributed to the insurance industry’s considerable investment in Florida. In fact, the insurance industry today touts more than 200,000 jobs that collectively pay about $12 billion in total salaries to workers in Florida.
It’s important to consider that if this successful tax credit is repealed, Florida will be sending a conflicting message to all industries that are thinking about relocating to Florida under the promise of a tax credit like this one, only to watch it get repealed years later. Even worse, eliminating it could send companies out of Florida to a competing state to plant their headquarters or call centers and, quite possibly, to a location that offers the tax credits they thought they would be able to maintain here in Florida.
While periodic review of corporate incentives is reasonable, it would be a mistake to repeal tax credits that have created jobs in Florida and contributed to the economy. We urge lawmakers to reject SB 378 as a shortsighted move that would swap one tax for another and result in higher premiums for all purchasers of insurance.