Declaring that other Southeastern states "are eating our lunch," a leading industry group lauded Gov. Rick Scott's plan to phase out Florida's corporate income tax.
"It's an extraordinarily brilliant idea that sends a stronger message than just about anything else we can do," said Associated Industries of Florida President Barney Bishop.
"Companies [looking to relocate] want more than good weather. They want assurances," Bishop said in an interview with Sunshine State News.
Bishop pointed to South Carolina, Georgia, Mississippi and Alabama as neighboring states that landed major manufacturing facilities in recent years while Florida idled.
German and Asian automakers have sited or expanded plants in all four states, generating tens of thousands of jobs.
Since each of those states has some form of corporate income tax, Scott, a former health-care CEO, figures Florida can better compete by dropping its levy.
The governor wants to reduce the business tax rate from 5.5 percent to 3 percent initially and phase it out completely by 2018.
Enacted in 1972 under Gov. Reubin Askew, the tax pumped $1.8 billion annually into the state's general revenue fund last year. That's down slightly from an annual average of $2 billion.
"We already have a low business tax as compared to other states,'' Scott said in Tampa on Thursday. "I want to phase it out. If we do ... there is no reason anybody will want to do business in any other state.''
Sean Snaith, an economics professor at the University of Central Florida, said that while phasing out the tax "makes sense," he doubts that abolishing it will, in and of itself, boost Florida's economic-development prospects.
"It won't be a tremendous impact overall, but it sends a signal about the environment for business in Florida," Snaith said.
Bishop also applauded Scott for aggressively reaching out to companies that may be open to relocating. The governor says he makes "cold calls" to five or more corporate executives daily to talk up Florida's business climate.
"It's important to get chief executives talking to each other. That hasn't happened in the last four years," Bishop noted.
And those conversations don't have to be long to be successful, he added.
When Alabama lured the German steelmaking giant ThyssenKrupp, the deal was sealed in a 90-minute conversation with company executives, the governor and top legislative leaders, Bishop relates.
The key to landing Krupp was the state's assurance that the needed permits and certificates of occupancy would be issued in a "time-certain" fashion.
"[Florida] couldn't do that in 90 months, let alone 90 minutes," Bishop said.
The windfall for Mobile, Ala.: 35,000 new jobs at a new $5 billion steelmaking and processing plant -- one of the biggest ever foreign investments in the country.
Similarly, South Carolina moved quickly to land a second Boeing fabrication and delivery facility that will add 12,000 jobs.
"They got a time-certain guarantee on permits that will ensure their opening by 2015," Bishop said of Boeing's deal with the Palmetto State.
Snaith agreed that tax cuts are just one economic building block.
"Coupling them with permitting and efficiencies in government will likely affect business growth in the state," the professor said. "Government can work to grease the skids."
Scott's corporate background drilled in the axiom that time is money. So he moved quickly last month to create a consolidated commerce department, just two doors down from his Capitol office.
In doing so, Scott was responding to business groups that expressed increasing concern that two other business-related agencies -- Enterprise Florida and the cumbersomely titled Office of Tourism, Trade and Economic Development -- were duplicative or confusing.
"There were times the left hand didn't know what the right hand was doing," Bishop said. "It was time-consuming."
Appreciating the need for speed, Florida's neighbors have been especially successful at reeling in automakers from overseas with a mixture of incentives and red tape-cutting measures.
South Carolina is home to an expanding BMW plant while Georgia recently lured Kia.
Mississippi's Nissan plant just added production of a new utility van to go alongside its production of Altima sedans.
Alabama enticed Mercedes Benz to build an M-Class factory in Tuscaloosa County.
According to the Tax Foundation, only five states -- Nevada, South Dakota, Utah, Washington and Wyoming -- do not have a state income tax.
Scott is betting that adding Florida to that short list will help the state better compete for new industries and jobs.
Dominic Calabro, president of Florida TaxWatch, said the governor's call for tax cuts "is a healthy and long-overdue discussion. Even in the midst of the so-called Great Recession, we need to see what we can do to outshine other states by thoughtfullyreducing and controlling the cost of doing business."
Calabro pointed out that states with lower taxes levels generally perform better economically.
Randall Holcombe, economics professor at Florida State University, said Scott's tax plan "makes sense in the context of his agenda to make Florida more business-friendly.Growth in the state's economy will more than make up for the revenue lost, so the idea is a good one for Florida."
Holcombe estimates that reducing the rate from 5.5 percent to 3 percent this year would lower state revenues "a bit more than $800 million, which is just over 1 percent of current total appropriations of more than $70 billion.
"Could the state budget survive another 1 percent cut? Of course it could.The question is whether the Legislature will go along."
Though some question the efficacy of cutting taxes while slashing the state's deficit-ridden budget, Scott is gaining support in the Legislature from unexpected places.
At a meeting of the House Committee on Finance and Tax last month, Rep. John Patrick Julien, D-North Miami Beach, called the dual federal and state taxation of Florida business "a little obscene.
I want to see this corporate income tax repealed," Julien said.
Bishop says industry is "ecstatic" with Scott's business-focused appointments thus far. "He's reached into the private sector -- filling the right jobs with the right people at the right time.
"We don't need incremental change, we need radical change," Bishop said. "This governor is committed to doing it better and faster."
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Reach Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.
