Summary
Florida exempts a portion of the value of the primary residence of Florida residents from property taxes. Florida Amendment 5 would create an annual adjustment of that exemption according to the Consumer Price Index if the change is positive that year. The homestead exemption does not apply to property taxes that go to schools.
Fiscal Impact
Amendment 5 would reduce future property tax revenues for local governments in Florida by an estimated $22.8 million in 2025, which would grow to about $112 million by 2028.
Proponents’ Arguments
Proponents of Amendment 5 argue that Florida voters have long supported exempting some of the property tax for residents and raising it as inflation and home prices increase.
Florida Rep. James Buchanan (R) sponsored putting the initiative on the ballot, arguing that it would “encourage home ownership, drive down the cost of home ownership, and ensure over time, as the cost of living goes up, that is reflected in their homestead exemption taxes.” He also argues that having the exemption go up as inflation goes up just makes sense to avoid undermining the benefit.
Florida Rep. Alina Garcia (R), who cosponsored putting Amendment 5 on the ballot, said that it “[W]ill benefit Floridians, especially the ones that have issues with paying for their homes—the seniors and people who have lower incomes. It’ll benefit them because taxes are probably out of control because property value is out of control.”
Opponents’ Arguments
Opponents of Amendment 5 argue that Amendment 5 would reduce local government revenue at a time when more money, not less, is needed and that local governments will have to make up for that revenue by raising taxes on others, such as renters and businesses.
Local governments “[H]ave one pot of money to pay their bills, and [Amendment 5] is diminishing their ability to collect dollars,” says Rep. Robin Bartleman (D), who is concerned about the effect on first responders.
The Florida League of Cities argues that Amendment 5 will lead to higher taxes on non-homeowners:
“What this does today is it shifts the burden. It shifts the burden from homesteaders to other participants in the property tax system—to businesses, to renters, to second-home owners.” And also that “[a]nother way to put it is that one person’s tax cut is another person’s tax increase, and we think that homeowners already have a really good deal in the state of Florida.”
Discussion
Florida voters have regularly approved homestead tax exemptions to reduce the property tax burden on homeowning residents, even when it is clear that means other property owners will likely have to pay more property taxes as a result.
Tax cuts are almost always a good thing. But, since Amendment 5 would only apply to homeowners and not to other property owners, including commercial properties and rental properties (and therefore renters), it’s not the most effective or fair way to cut taxes.
In Florida, in particular, reducing property taxes only on homeowners doubles down on state policies that tax visitors rather than state residents—even for services for which residents are the primary customers. A cut in all property taxes would be fairer. Additionally, a cut in all property taxes would not suffer the same economic distortions that arise from only cutting taxes for one narrow class of citizens.
Arguments that Amendment 5 would reduce local government revenues are not true. Amendment 5 only adjusts the homestead exemption for inflation, so it reduces the future rate of increase in revenue for local governments but does not reduce their revenues. It’s the time-honored tradition of governments arguing that reducing the rate of growth in their revenue is a cut.