Want Job Creation? A Funny Way of Showing It…
Job creation has been at the forefront of Florida politics over the last few years. Governor Rick Scott campaigned on a primary goal of pursuing jobs and creating new employment opportunities for Floridians at a time when the economy was languishing. Recent unemployment numbers show these results have been successful– the jobless rate has been declining steadily. Unfortunately, the Florida legislature in recent weeks started targeting a salary tax credit available to the insurance industry for possible elimination. The idea is to eliminate the credit, reportedly worth about $220 million annually, and reduce fees Floridians pay for motor vehicle licensing. The premise is simple— take a tax break away from “big insurance” and give the money back to Floridians. As it turns out, however, things aren’t this easy.
First, states throughout the country would be pleased to compete with Florida for insurance industry jobs. Financial services sector jobs such as those in the insurance industry are “clean industry” jobs that offer attractive salaries and opportunities for advancement. Although many of the jobs might be argued to remain in Florida regardless of the tax credit, many others relating to functions that can be performed as easily elsewhere as they can in Florida. Jobs like information technology and policy administration don’t necessarily have to be performed in Florida. Eliminating the salary tax credit not only will send a negative message throughout the country as groups consider locating people in Florida, it could cause groups to reevaluate the economics of maintaining their current staffing levels here.
Second, the benefit supposedly being passed on to Floridians in the form of lower license fees seems like it will be illusory if taxes on insurers are effectively increased. Insurances rates are established with reference to insurers’ losses and expenses. All other things being equal, if expenses go up, those costs will be reflect in insurers’ subsequent rate filings. By reducing motor vehicle fees, the legislature essentially would be trying to take credit for doing something overtly beneficial for consumers without telling them there’s no such thing as a free lunch.
Obviously it is a public pollicy decision for the government whether it wants to offer tax credits or other incentives for job creation. If the legislature does not believe the insurance salary tax credit is beneficial, it certainly can eliminate the credit. However, in an era of emphasis on job creation, it seems inconsistent to eliminate this tax credit that results in professional positions being brought to the state while the legislature continues to consider many other forms of incentives.