| August 2006 |
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TaxAdvisor
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Florida Repeals Intangibles Tax
The Governor of Florida, Jeb Bush, recently signed into law the repeal of the
state's insidious intangible personal property tax. The repeal is effective
January 1, 2007, which effectively ends the tax immediately. This removal,
according to the Governor, "stops penalizing people for taking responsibility
for their own retirement by saving and investing over a lifetime."
The repeal will save over 300,000 taxpayers approximately $131 million.
Because the exemptions on the tax have steadily increased over the years, only
those individual taxpayers with over $370,000 and couples with over $620,000 in
taxable assets were subject to the tax. The tax was also levied against
corporations, LLCs and partnerships with over $370,000 in taxable property.
The tax was levied on intangible assets such as stocks, bonds, mutual funds
and LLC interests. The tax was assessed at a rate of .50 mills or $.50 per
$1,000 of taxable property. There was also a $60 tax exemption that effectively
exempted an additional $120,000 of assets over the base exemptions of $250,000
or $500,000 of assets.
The repeal of this tax increases the comparative tax advantages of moving to
Florida. Florida already has no personal income tax and a low corporate tax
rate. Florida does have sales, real and personal property taxes, but these
exactions are no more onerous in rate than those in Ohio.
On a somewhat related note, the President also signed into law H.R. 4019
which clarifies P.L. 104-95. Specifically, states are not permitted to tax
nonresidents' retirement income. Before the law, some states were taxing
nonqualified deferred compensation payments to retired partners living in other
states. The law clarifies that only residents may be taxed on payments under a
nonqualified deferred compensation plan that has substantially equal periodic
payments over a period over 10 years in length. The substantially equal periodic
payments definition includes payments that change due to a COLA (Cost of Living
Adjustment) or plan caps.
If you have any questions or would like additional information regarding this
Tax Advisor, please contact one of our tax practice leaders: Jim Bowen at
330-255-2461 or Mike Hydell at 330-255.2456.
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