Tax Policies Assignment

For many years, Florida State's tax burden has consistently been the lowest among other states. Florida does not have a personal income tax, although it does have property and sales taxes. In that situation, it is critical to analyze the state's key tax policies, which include the property tax, personal income tax, corporate income tax, and sales tax.
Florida is one of seven states in the United States that do not levy personal income taxes. Florida State removed the tax on intangible assets such as mutual funds, stocks, and bonds in 2007. As a result, there are no taxes on these homes. However, the state does impose a 5.5% tax on corporate income.

Property Tax

According to the Florida constitution, all of the revenue collected from the property taxes are reserved for the local governments. The state does not use such kind of revenue. Property taxes are evaluated based on the market value or ‘just value’ of the property. Increase in the value of the property is limited to 3 percent tax from the previous assessment. Alternatively, CPI (Consumer Price Index) can also determine the percentage of the tax. This kind of tax limitation is also described as Save Our Homes Cap.

The local governments are the ones who set millage rates of taxes. For instance, ten mills are equivalent to 1% (Johnson and Charles 57). Furthermore, the value of the given property is multiplied by the millage rate to define the dollar amount of the given property tax. School districts, city, and county are encouraged to permit tax levy up to 10 millage rates. However, special districts, which deals with special projects such as water management are encouraged to levy an additional taxes that are normally under two mills. The same Florida State has tax exemptions for properties. For instance, a homestead is exempted from tax up to $50000. The senior citizens who are over 65 years of age are exempted from property tax. Similarly, the veterans and disable ones are also exempted from paying property taxes.

Capital tax

This kind of tax is levied on the return gained from selling a given investment asset. In that case, the types of capital assets that are subjected to taxation are land parcels, businesses, homes, personal items, and stocks. However, Florida State is different because it does not issue taxes on capital gains.

Inheritance and Estate Tax

In Florida, there are no taxes on death, neither of the values of the gifts or value of the estates or inheritance received by the next of kin. However, the repeal of the estate tax was made effective on Dec. 31, 2013. In addition to the estate tax, Florida State tax applies to many other kinds of purchases. These include sales tax, cigarette tax, gas tax, document stamp tax, and hotel taxes. In Florida, the charges for sale tax is equivalent to 6%. However, non-prescription and prescription drugs and food are exempted from state’s taxation. Counties also have the option of charging their additional sales taxes. In that case, some areas have a sale tax of 9.5 percent. Florida State charges $1.34 tax for every packet of cigarettes. Excluding cigars, other products of tobacco are also subjected to taxation. This can be equivalent to 60% of the wholesale prices.

When it comes to gas taxation, Florida charges 34.4 cents for every one gallon of unleaded gas. Similarly, 29.6 cents for every one gallon of the diesel energy. A taxation of 70 cents for an item that is valued at $100 is assessed through documents, which can transfer the interest in the sector of real estate in Florida, including quitclaim deeds and warranty deeds. The taxation can also be levied on bonds, notes, liens, mortgages, and written obligations stating to pay. These types of obligations are known as contracts. They offer a taxation of 35 cents for every item valued at $100. Hotel taxes in Florida State varies from county to the other. The taxation ranges between 2% and 6%. Hotel tax is also described as Tourist Development Tax. It is charged based on hotel rooms plus the regular sales taxation.

Tax Policies of Colorado State

Taxation in Colorado State includes personal income tax, sales taxes, real property taxes, estate, inheritance tax, marijuana taxation, and other item facts. Taxation of the mentioned items are discussed as follows:

Taxation of Personal Income

The tax rate for personal income in Colorado State is flat. The value is at 4.63% regardless of your level of income. The tax returns of Colorado State is usually on April 15. It can also be on the following business day if date April 15 happened to be a holiday or weekend. The personal income tax in Colorado is filed electronically as part of IRS’ programs. Members of the Colorado State are also eligible to establish an online revenue account for free e-file.

Sales Taxes

In Colorado State, sale tax is at 2.9% for the retail sales. However, cities and counties within Colorado have the option charging their rates apart from the standard state rate. Also, the tax jurisdiction allows the state to administer collections when most of the goods are subjected to sales tax and services are not. Nonetheless, the jurisdictions, which collect taxes by themselves have the option of establishing their regulations and rules from which services and goods are subjected to taxes as per the local sales.

Real Property and Personal Taxes

Personal business property and real estates are eligible for taxation in Colorado State. Personal business properties may include furniture, computers, shelving, items, and any other equipment that indirectly or directly help you with the generation of business income. The role of the county assessor is to determine the value of the real property with the market value cost and income approach. Taxes on the personal business property can also be evaluated based on the percentage of the actual value of the property. The business owner can also determine the tax bill for his or her property by multiplying the local tax rate with the already assessed value. However, Colorado State is still debating about personal property taxation. The debate is whether the tax should be paid as part of rent payment or to lower income taxes.

Estate and Inheritance Taxes

According to Colorado State, estate taxations do not apply to the descendants whose death are after January 1, 2005. The taxation is based on the death tax credit, which is allowable by the federal return program. However, the credit was abolished in 2004 because of the changes that were put in place on the federal estate tax law. In addition, future changes will dictate whether federal laws will be used in determining the collection of estate tax or not.

Colorado State offers income tax on trusts and estates. This type of taxation is referred to as the fiduciary income tax, and it is prescribed at a flat rate value of 4.63 percent. Therefore, when a trust or estate is administered in the Colorado State, it is defined as a resident trust or estate (Jensen 107). On the other hand, the non-resident trusts or estates, which are controlled in the Colorado State are advised to file tax returns when their source of income is from Colorado. The same Colorado State does not impose gifts or properties that are transferred by gifts, more so when the transfer happened after January 1, 1980.

Other tax facts in Colorado

Colorado State does not levy or impose the tax on intangible personal properties. It allows taxpayers to check on the voluntary programs from which they can help with their charitable contributions. The contributions can be a cut-off from their annual state returns. For example, this year, 2017, taxpayers in Colorado had the option of choosing from nine funds, which they are comfortable of directing their money to.

Marijuana Taxation

Colorado is one of the states in America that impose the tax in marijuana. Taxation includes both retail and medical marijuana. Furthermore, marijuana is considered a tangible property in Colorado State. In that case, the rate of taxation of marijuana is equivalent to 2.9%. This particular rate is charged on the price that will be used by the final consumer. From July 1, 2017, retail marijuana products were exempted from the state sales tax. However, state taxation applies to the medical marijuana and its productions. Also, the infused products of marijuana are entitled to taxation, which is at 15% of the consumer price. This rate was at 10% before July 1, 2017, when it was increased to 15%.

Discussions

The taxation systems for the two states, which include Florida and Colorado State reasonable. With Florida, there is no taxation on personal income. However, it imposes the tax on corporate income at 5.5%. According to the people of Florida State, the rate is reasonable and affordable as well. Unlike Florida State, Colorado imposes tax on inheritance and estate property. The process is based on the death tax credit as described by the state's laws. As mentioned before, the tax does not apply to the descendants whose death happened after 2005.

With the case of Colorado State, taxation of the marijuana medical products is burdensome. This is because doctors and patients depend on these products for medications. Changes in the rate, which was made on July 1, 2017, should have remained at 10% or below. Additionally, taxation of the personal business properties is burdensome since businesspersons are supposed to pay rent at the same time. To some extent, some changes have been made by both Colorado and Florida State. For example, in 2007, Florida repealed taxation on intangible items like stocks and bonds. Similarly, the repealing of the taxation of estate and inheritance was made effective in 2013. These changes have not affected the revenue collection of Florida State. In fact, the state is at its best when it comes to economic performance.

Colorado also made some changes as mentioned above. Colorado made major changes in the taxation of inheritance and estate it even abolished the death tax credit in 2004. Nevertheless, these changes have not affected the economic performance of Colorado. In fact, the major revenue collection comes from personal income and capital gain taxation. However, there are still factors that determine or inhibit the effectiveness of the above-discussed tax policies in both states. One of the major factors is the political factor, which is also determined by the federal laws. For instance, the federal laws determined the effectiveness of the 2017 tax policy on marijuana medical products.

Conclusion

In conclusion, the two states have good tax systems. However, the taxation system of Florida State is better than that of Colorado State. Florida does not impose the tax on personal income but corporate income. Unlike Florida, Colorado offers a flat rate taxation of 4.63%. This imposed despite your level of income. Additionally, Florida does not impose the tax on capital gains, but still delivers regarding economic performance. On the other, Colorado offers taxation on capital gains in addition to the standard income tax. Though the state government will benefit regarding revenue collection, the economic performance of the citizens is affected.

















Works Cited

Johnson, Harry L, and Charles P. White. State and Local Tax Problems. Knoxville: University of Tennessee Press, 1969. Print.

Jensen, Jens P. Survey of Colorado State Tax System. Denver, 1930. Print.