Why Florida flourished after dumping income tax

Florida’s successful method of creating jobs for its citizens cannot be ignored, writes Keith Bryer.

Florida, in the United States, is best known for alligators, Disney World, performing dolphins and rocket launches from Cape Canaveral, but in the last five years, it has become known for something quite different – its successful method of creating jobs for its citizens.

It is a way of doing so that socialists fervently hope no one will discover. It flies in the face of their antique economic beliefs that insist that only an all-powerful state can improve lives and create the chimera of human material equality.

Florida’s way is simple enough. It is letting people get on with life, liberty, and the pursuit of happiness, with as little government meddling as possible. It is in other words the free enterprise way.

Socialists have a long history of unsuccessful sustainable job creation, their efforts proving that they are only brilliant at propaganda and making plausible promises of paradise to come. At just about everything else they fail, except hugely expanding the number of bureaucrats employed to enforce and oversee a mountain of new regulations. Like all social engineers, they sincerely believe in their theories. Hendrik Verwoerd was a prime example.

However, when they get into power, the net result of their efforts is a massive expansion of the number of people licensed to tell others what to do – their salaries paid with other people’s money.

Equality

Some are genuinely concerned with the state of the human condition, but their promises of equality have everywhere resulted in totalitarian societies, less freedom, more secret police and more soldiers.

Equality is not the driving force in Florida. Opportunity is. It is the major reason for its success. Another is giving people the chance to make a profit and through individual effort improve their standard of living.

Two weeks ago, the Florida governor, Richard Scott, reported on the state’s economy and its progress since he took office. At that time, Florida had an unemployment rate of 10 percent (900 000 people), a debt running into billions of dollars, and a floundering tourism industry, traditionally the bedrock of its economy. Since then a million more people have jobs and people are pouring into the state in search of similar success. Unemployment is now at 5 percent, and the economy has grown faster than the US economy as a whole.

Remarkably, news of Florida’s success in fixing its poor economy has not hit world headlines, and even the big hitters like CBS, the Washington Post and the Los Angeles Times – let alone the august pages of the Financial Times and The Times in the UK. Surprisingly, only The Guardian, that bastion of British leftwingery, ran the story.

Investors on the other hand have noticed. This is not very surprising. Florida’s economy ranks 4th in the US and 18th in the world. It has more people than New York State. In business terms, it is not to be ignored. It trades on an international scale, which in 2013 reached an annual $158 billion (R2.54 trillion).

Straightjackets

Getting back to life, liberty, and the pursuit of happiness. In the context of the Florida economy, these admirable goals translated into swift decision-making by its government, the kind of decisions our leaders should and could make, if they threw away their Marxist economic straightjackets. First on this list was to reduce the tax burden on business, adding more attractions to investment to Florida’s zero-income tax regime.

Yes, the state has no income tax. How about that?

It was not the only attack on regulations and regulators. Social spending was reduced as well, cutting another swathe through bureaucracy. Tax exemptions on machines, corporate tax reductions, and lower taxes on leases were next, balanced by the closing of loopholes (bad luck for tax lawyers).

That was not the end of Florida’s sane decisions. One was shedding 11 000 jobs in the civil service (with more planned), running a budget surplus instead of a debt burden, the dumping of 21 000 regulations into the wastepaper basket, and scrapping $600 million previously spent on special projects that bureaucrats had slid into the state’s budget over the years.

These actions freed up billions of dollars to spend on infrastructure upgrades.

Are Florida’s workers better off? Socialists will argue they are not and reel out the usual reasons; inequality of income still exists; the well educated and skilled benefit most; and profits have risen. And so on.

But the fact remains that Florida has become a better and more attractive investment destination. The unemployment rate has been cut in half in only five years, and taxpayers are keeping a lot more of what they earn, paying mainly indirect taxes where at least they have a choice.

The economic philosophy employed in Florida is a tried and tested one. It works today as it has always worked by letting people get on with their lives without the dead hand of bureaucracy heavy on their shoulders.

Could such measures work in South Africa? Is Africa and are its people so different that they cannot work on our continent? Tanzania does not think so, to judge by the actions of John Magufuli, its new president, a man who scarcely two months in office has begun to bulldoze his way through inefficiency, corruption, and waste.

Gee, he even cancelled the national Independence Day party in favour of a national day of cleaning up the rubbish in the streets, and has made surprise visits to key officials and fired a good number of them. So it can be done, and it may well be that president John Magufuli and governor Richard Scott are reading from the same hymn sheet – or should that be, “singing”?

* Keith Bryer is a retired communications consultant.

** The views expressed here do not necessarily reflect those of Independent Media.

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