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April 6, 2015
Economic Analysis: The Jeb Bush Tax Cuts in Florida
by Martin A. Sullivan

Full Text Published by Tax Analysts®

This article first appeared in the April 6, 2015 edition of Tax Notes.

Cutting taxes was a priority for Jeb Bush during his eight years as Florida governor. At his first State of the State address in 1999, he got a standing ovation when he announced his plan to cut Florida taxes by over $1 billion. "It's not our money," he told the Republican-controlled Legislature, "it's the people's." Seven years later, his message remained unchanged. In his 2006 State of the State address, he proposed cutting taxes by $1.5 billion.

Now as an all-but-officially-announced candidate for the 2016 Republican presidential nomination, Bush frequently refers to the tax cuts he signed into law in Florida. The website of his "Right to Rise" political action committee claims that taxes were cut in Florida by nearly $20 billion during his tenure as governor.

Building on official revenue estimates published by the Florida Legislature, this article provides various estimates of the budget effects of revenue laws enacted during the Bush years and tries to put the revenue changes into context so readers can decide for themselves the quantitative significance of these cuts.

The Estimates

Official revenue estimates from the Florida Legislature show that most of the tax cutting during the 1999-2006 period was achieved with legislation enacted during the first two years of Bush's tenure. The estimated changes to total state and local revenue reported by the Florida Legislature are shown in Figure 1.

Official revenue estimates of all legislation enacted in 1999 total $1.49 billion for fiscal 1999 and 2000. Florida has no income tax. Reductions in local property taxes, the state tax on intangible assets, state sales taxes, and state unemployment tax accounted for the bulk of these changes. For legislation enacted in 2000, the estimated total revenue change in fiscal 2000 and 2001 is $908 million. (Data underlying the figures are provided in the table.)

To give some perspective of the size of these tax cuts, Figure 2 translates the changes into percentages of total state and local revenue. The revenue reduction in percentage terms was 1.1 percent attributable to laws passed in 1999 and 0.6 percent from legislation enacted in 2000. In all the following years, the estimated revenue changes were between 0.2 and -0.2 percent of total revenue.

Tax Analysts estimated the cumulative effect on revenues of legislation enacted during Bush's two terms. These estimates are shown in Figure 3. In 2006 actual revenues in Florida ($110.93 billion) were $2.54 billion below what they would have been ($113.47 billion) if revenue laws passed during 1999 through 2006 had not been enacted. That is a reduction in total revenue of 2.2 percent. The estimate of revenue reduction over the entire eight-year period is $13.04 billion, about two-thirds of the figure posted on the Bush PAC website.

   Estimates of Revenue Effects of Legislation Enacted in Florida, 1999-2006

 Year of Enactment                     1999        2000          2001     2002

 Official Estimates of Legislation (millions of dollars):

 General Fund Estimate (2 year)        -583        -940          -324     -400

 Trust Fund Estimate (2 year)          -101         188           116       74

 Local Estimate (2 year)               -802        -157             4      -15

 Total Estimate (2 year)             -1,486        -908          -204     -341

 Revenue Totals (billions of dollars):

 General Fund Revenue (2 year)         38.4        50.5          41.6     40.7

 Total State Revenue (2 year)          64.3        67.4           71      75.1

 Total State and Local Revenue        132.4       140.6         149.6    159.5
 (2 year)

 Estimates as Percentage of Revenue:

 General Fund Revenue (2 year)       -1.52%      -1.86%        -0.78%   -0.98%

 Total State Revenue (2 year)        -1.06%      -1.11%        -0.29%   -0.43%

 Total State and Local Revenue       -1.12%      -0.65%        -0.14%   -0.21%
 (2 year)

 Fiscal Year                          1999        2000           2001     2002

 Cumulative Effects of Law Changes (billions of dollars):

 Actual Total Revenue (single year)   64.15       68.25         72.35    77.29

 Estimated Revenue Without            64.87       69.47         73.75    78.95
 Tax Cuts

 Cumulative Effect on Revenue        -0.728      -1.223        -1.397   -1.661

 Cumulative Effect (percent)          -1.1%       -1.8%         -1.9%    -2.1%

 Per Capita Estimates (dollars):

 Population (millions)                15.58       15.98         16.31    16.63

 Actual Total Revenue (single year)   4,117       4,270         4,437    4,646

 Estimated Revenue Without           4,164        4,347         4,523    4,746
 Tax Cuts

 Cumulative Effect on Revenue          -47          -77           -86     -100

                               [table continued]

 Year of Enactment                    2003         2004          2005     2006

 Official Estimates of Legislation (millions of dollars):

 General Fund Estimate (2 year)        508          -93        -1,916     -488

 Trust Fund Estimate (2 year)         -165          130         1,677      -75

 Local Estimate (2 year)               -71           29            64        9

 Total Estimate (2 year)               272           66          -176     -554

 Revenue Totals (billions of dollars):

 General Fund Revenue (2 year)        41.3         45.2          52.9     54.8

 Total State Revenue (2 year)         81.6         92.4          99.4    101.6

 Total State and Local Revenue       172.3          193         213.9    227.7
 (2 year)

 Estimates as Percentage of Revenue:

 General Fund Revenue (2 year)       1.23%       -0.21%        -3.62%   -0.89%

 Total State Revenue (2 year)        0.42%        0.04%        -0.24%   -0.55%

 Total State and Local Revenue       0.16%        0.03%        -0.08%   -0.24%
 (2 year)

 Fiscal Year                          2003         2004          2005     2006

 Cumulative Effects of Law Changes (billions of dollars):

 Actual Total Revenue (single year)  82.22        90.06        102.94   110.93

 Estimated Revenue Without           83.86        91.82        105.04   113.47
 Tax Cuts

 Cumulative Effect on Revenue       -1.635       -1.759        -2.097   -2.536

 Cumulative Effect (percent)         -1.9%        -1.9%           -2%    -2.2%

 Per Capita Estimates (dollars):

 Population (millions)               16.98        17.37         17.78    18.15

 Actual Total Revenue (single year)  4,842        5,183         5,790    6,111

 Estimated Revenue Without           4,939        5,284         5,908    6,250
 Tax Cuts

 Cumulative Effect on Revenue          -96         -101          -118     -140

Figure 4 compares actual per capita revenues with estimated per capita revenues without law changes during the 1999-2006 period. Revenues in Florida are estimated to be approximately $140 less per person ($6,111 versus $6,250) in 2006 because of revenue laws enacted during the Bush governorship.

Important Details

There are some caveats about the interpretation of these figures. First, official estimates shown in the table include the revenue impacts of law changes during only the first two years after enactment. (Generally, federal revenue estimates include the revenue impact of law changes during the first 10 years after enactment.) For example, for tax laws enacted during the 60-calendar-day regular legislative session in the first half of 1999, the estimates shown in Figure 1 are the sum of the estimates made for the fiscal years beginning July 1, 1999, and July 1, 2000. For tax breaks that are front-loaded, like temporary sales tax holidays, these estimates could be considered to overstate the budget effects of changes in law. Conversely, for tax changes that are phased in or have delayed effective dates, these estimates could be considered to understate the budgetary impacts.

Second, these figures are not adjusted for inflation. Any comparison or summation of dollar amounts over time would be more economically meaningful if adjustments were made for inflation. Therefore, it could be argued that the estimated effects of law changes presented here for the early years are understated relative to those for later years. (The consumer price index in 2006 was 24 percent higher than it was in 1999.) However, most discussions of the size of tax cuts do not include inflation adjustments.

Third, some of these official estimated revenue increases are not from what all would consider changes in tax law. They include increases in lottery and slot machine revenue, as well as increases in tuition, service charges, and license and other fees. Like the official budget presentation, this article makes no attempt to distinguish between tax and nontax revenues.

Fourth, these estimates do not include the large reduction of Florida estate tax revenue attributable to the four-year phaseout of the federal tax credit for state estate taxes. Florida's estate tax piggybacked on the federal tax credit, which the federal government began phasing out on October 1, 2002, and completely eliminated on October 1, 2005. The change in federal tax law automatically reduced Florida estate taxes. The full phaseout of the federal credit reduced Florida revenue by approximately $800 million annually. This tax cut did not receive an official score from the Legislature because no legislative action was required to put it into effect.

Technical Notes

The revenue estimates shown in Figure 1 and on lines 1 through 4 in the table are from "Fiscal Analysis in Brief 1999-2000" and seven subsequent editions published by the Florida Legislature, available online at On those lines, the entry for any year (for example, 2000) is the sum of the estimates for the two fiscal years following Florida's regular legislative session of that year (for the year 2000 entry, fiscal 2000 and 2001).

Total general fund revenues (line 5) are also from various editions of "Fiscal Analysis in Brief." Total state revenue (line 6) and total state and local revenue (line 7) are from the historical data of the U.S. Census Bureau on state and local government finance, available online at (Individual state estimates are not available from the Census Bureau for 2000 and 2002. For those years, estimates were calculated by taking the simple average of the estimates of the preceding and subsequent years.) Population figures are also from the Census Bureau.

Percentage changes for each year of revenue are calculated as 100 times the ratio of (1) the two-year total of estimated total revenue changes from legislation to (2) total revenue collections over the same two years. This percentage change (measuring the effect of laws changed in any given year) is then assumed to be maintained for all years beyond the initial two-year period. For example, the 1.6 percent estimated average reduction in revenue (using estimates and data for fiscal 1999 and 2000) for legislation enacted in 1999 is assumed to reduce revenues by 1.6 percent below what they otherwise might have been in all fiscal years through 2006.

The cumulative revenue effects of legislation shown in Figure 3 and on line 13 are the difference between actual total revenue (line 11) and estimated totals without the effects of legislation (line 12). Estimated total revenue without legislation is actual revenue reduced by the assumed permanent effects of current and past legislation. For example, estimated total revenue without tax cuts in 2001 is estimated actual revenue ($72.351 billion) divided by 1-0.00136 to take into account tax cuts in 2001 (which reduced revenue by 0.136 percent); divided again by 1-0.00646 to take into account tax cuts in 2000 (which reduced revenue by 0.646 percent); and again by 1-0.01123 to take into account tax cuts in 1999 (which reduced revenue by 1.123 percent).

Figure 1.
Two-Year Budgetary Effects of Florida Revenue Legislation, 1999-2006
(official estimates, in millions)

Figure 2.
Budgetary Effects of Florida Revenue Legislation, 1999-2006
(percentage changes)

Figure 3.
Estimated Cumulative Effects of Florida Revenue Legislation, 1999-2006
On Revenues in Fiscal 1999-2006

Figure 4. Florida Per Capita Total Revenue, 1999-2006
Actual and Estimated Without Tax Cuts

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