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Jax Daily Record Wednesday, Sep. 22, 201012:00 PM EST

Scott's corporate tax cut may jeopardize vouchers

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by John Kennedy

The News Service of Florida

Republican Rick Scott launched a new TV ad Tuesday ridiculing Democratic rival Alex Sink’s past support of tax increases, labeling her a “liberal” who backs higher taxes “morning, noon and night.”

But the centerpiece of Scott’s own tax-cutting plan, elimination of the state’s corporate income tax, is drawing pushback from some on both the political left and right, who warn it will drain needed state dollars even as it jeopardizes a longstanding private-school voucher program.

“We’re hoping that if he becomes governor, some people in his own party will see that this idea could cause some real collateral damage,” said Jon East, a spokesman for the Florida School Choice Fund, an advocate for the state’s school voucher program, which this year will draw as much as $140 million in business tax credits for sending low-income students to private schools.

The corporate income tax is by far the largest funding source for the program, which helped pay tuition and fees for almost 29,000 students in private and parochial schools.

“Eliminating the corporate income tax would have a tremendous impact on this program,” East said.

The corporate income tax pulls $1.8 billion into the state treasury. State analysts this month slightly increased the amount of dollars the tax will bring in, based on what they described as “strengthening in the underlying forecast for corporate profits.”

Sink has proposed giving startup businesses a three-year waiver on corporate income tax, but stops short of calling for a rollback in the levy.

She was targeted Tuesday by Scott in an ad that blisters her for having formerly been part of an education commission that recommended expanding the state’s utilities tax, opposing 2008’s Amendment 1 property-tax cut, and joining other Democrats in conceptually backing an increase in the state’s 6 percent sales tax.

But Sink does support giving corporations tax credits for creating new jobs and for offsetting the cost of research and development.

“However, instead of the tired, failed ideas in Rick Scott’s economic policy, as governor, Alex Sink will institute tax cuts tied explicitly to job creation,” said Sink spokeswoman Kyra Jennings.

Scott has anchored his economic plan for Florida around phasing out the levy over seven years, a move he says will “have a large positive benefit for Florida’s economy while having a minimal impact on state revenues.”

Scott’s proposal would reduce the current 5.5 percent tax rate on corporate income earned in Florida by 2.5 percent, erasing about $800 million even as the state faces a $2.5 billion budget shortfall next year.

Scott, however, said eliminating the tax will spur economic growth and help push the state toward his goal of creating an additional 365,000 jobs. New jobs, in turn, will increase consumer spending and boost sales tax collections.

“The difference between Rick’s plan and your typical cut spending and government plan is that Rick’s is based on decreasing the size of government as it relates to the overall gross domestic product, growing the private sector by doing this,” said Jen Baker, a Scott spokeswoman. “Revenues increase and the cost of government decreases.”

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