A TV ad misleadingly accuses Florida Gov. Ron DeSantis of increasing taxes. But the law in question didn’t create a new tax. Instead, it implemented a more effective way of collecting an existing tax.
The law required online vendors to directly charge sales taxes to consumers. Previously, Floridians were supposed to report those sales taxes to the state themselves, but few did.
TV and radio ads from the progressive group DW PAC also blame DeSantis for rising homeowner insurance rates in Florida. Rates in Florida have skyrocketed as a result of litigation costs and claim fraud schemes, a spokesman for the Insurance Information Institute told us.
DeSantis signed legislation last year aimed at reining in those problems and stabilizing the market in Florida. But some Democrats say his legislation did little to curb rising rates, will make it harder to sue insurance companies and included some measures that will increase insurance rates for some.
Finally, the ads make the claim that DeSantis supports “cutting Social Security and Medicare.” This has been a frequent attack against DeSantis by Donald Trump and groups that support the former president’s reelection bid. As we have written, DeSantis has, in the past, supported proposals that would reduce Social Security and Medicare spending, including by raising the age for full eligibility. In an interview on March 12 on Fox News, however, DeSantis said, “You know, we’re not going to mess with Social Security as Republicans.”
DW PAC is responsible for a project called DeSantis Watch, which says that it is “dedicated to shining a spotlight on the Governor’s failures of leadership that make all of us less free.” The ads began airing in Iowa on May 11 ahead of DeSantis’ visit the next day to the Hawkeye State, where the Jan. 8, 2024, caucuses are first in the Republican primary election calendar.
DeSantis has not officially declared his candidacy, though his campaign-style appearance in Iowa for two fundraisers suggests an announcement may be forthcoming.
According to a DeSantis Watch press release, DW PAC “is launching a five-figure ad buy across broadcast television, digital platforms, and radio” in Iowa. The TV ad features Russians dolls with the images of Trump and DeSantis.
Taxes
The ad’s narrator says, “While Americans struggle to get ahead, he [DeSantis] increases taxes.” On screen, the ad shows a partial quote from an April 21, 2021, story in the Orlando Sentinel, “Just before midnight … signed $1 billion tax on consumers.”
The ad is referring to a bill DeSantis signed on April 19, 2021 — minutes before a midnight deadline — to require out-of-state retailers, such as Amazon, to collect and remit sales tax for online purchases. Prior to that law being passed, customers were supposed to contact the state’s Department of Revenue and pay the 6% sales tax owed on their purchases from out-of-state sellers.
An analysis of the bill by legislative staff said that “compliance” with the original tax was “notoriously low.”
“State law [in Florida] requires consumers to remit use tax to state tax authorities whenever a seller doesn’t collect tax on a taxable transaction at the time of sale,” according to Avalara, a Washington-based transactional tax processing company. “However, use tax compliance is extremely low — fewer than 2 percent of taxpayers report it — and it’s difficult for states to enforce. For starters, they’d have to audit everyone to discover who failed to pay sales tax on taxable purchases. It would be a painstaking process, and the costs would outweigh the benefits.”
Although some Democrats have criticized DeSantis’ signing of the bill, saying that it amounted to raising taxes on Floridians by $1 billion a year, this was not a new tax. It was simply a different and more effective way to collect a tax that was already on the books.
Ever since the U.S. Supreme Court’s decision in South Dakota v. Wayfair in 2017 that allowed states to require online, out-of-state sellers to collect sales taxes, “every state with a sales tax has adopted laws requiring remote sellers to collect and remit sales tax,” Jared Walczak, vice president of state projects for the Tax Foundation, told us via email.
“Adopting these rules increased tax compliance, but it neither created a new tax nor raised a rate,” Walczak said. “There’s been incredibly little controversy about adopting these requirements, which most policymakers see as straightforward enforcement of existing laws as an ever-greater share of transactions shift online.”
In Florida, the bill passed 27-12 in the state Senate and 93-24 in the House.
“All 45 states with statewide sales taxes have adopted remote seller provisions, typically on a broad bipartisan basis,” Walczak said. “Characterizing Florida’s remote seller law as a tax hike is misleading, and it would require one to believe that every state with a sales tax, under both Republicans and Democrats, went on a sales tax-hiking spree. That simply isn’t the case.”
DeSantis’ office offered a similar defense of the law.
“The bill did not create a new tax because the tax obligation already existed on the consumer to remit payment to the state for online sales tax,” DeSantis’ office said in a statement to Jason Garcia of Seeking Rents, a newsletter and podcast focused on Florida. “SB 50 simplified the collection process for this pre-existing sales tax responsibility by transferring that collection role to the seller, as is the case with any brick-and-mortar business in Florida. Because of this simplification, the state will collect more tax revenue — but not because a new tax was created.”
Homeowners Insurance Rates
The ad from DW PAC also blames DeSantis for skyrocketing homeowners insurance rates in Florida.
DeSantis “fueled the rise of costs,” the ad’s narrator says. On screen, viewers see, “Florida homeowners pay nearly 3x national average for homeowners insurance” as a newscaster says, “Even more double-digit rate hikes this year.”
A 60-second radio ad that purports to be a telephone call from an Iowa woman to a Florida woman makes a similar claim.
“Your Governor, Ron DeSantis, he’s here, asking us for a job, so I wanted to find out how he’s done for you,” the Iowa woman says.
“Well, do you like paying higher insurance rates?” the Florida woman asks, to which the Iowa woman says she does not.
“Then you won’t like Ron DeSantis,” the Florida woman says. “Under DeSantis, our property insurance rates doubled.”
It’s true that home insurance rates have exploded in Florida in recent years.
“Florida’s average home insurance premium in 2022 was $4,231, nearly three times the U.S. average premium of $1,544,” Mark Friedlander, director of communications for the Insurance Information Institute, told us via email. “Rate increases across the state averaged 33% last year and are estimated to rise at an average of 40% in 2023. When Gov. DeSantis took office in late 2018, the average statewide premium was $1,960 and average premium increases were running below 1%.”
But what is driving the increases and is DeSantis to blame?
Florida homeowners insurance rates have typically been higher than the national average because Florida “has the highest risk of catastrophe of any state,” according to a January report from Kin, a home insurance company. “And unfortunately, climate change causes more severe hurricanes. This increases the chance of lots of homeowners experiencing claims all at once, forcing home insurance companies to raise rates to cover the potential claims.”
But the report blames other culprits for the state’s high rates as well, including insurance fraud and high litigation costs.
Friedlander told us those “man-made” fraud and litigation costs are what is behind the recently soaring rate increases.
“The escalating cost of home insurance is being driven primarily by what we have labeled a man-made crisis of litigation abuse and claim fraud schemes that has escalated over the past four years,” Friedlander said. “Florida accounts for nearly 80% of the property claim lawsuits filed in the U.S. versus just 9% of the property claims.”
The Kin report states that what is worse is that “[b]etween 2013 and 2020, Florida property and casualty insurers paid $15 billion in claims costs, but only 8% of that went to consumers. Lawyers fees, however, accounted for 71%.”
Although many assume that hurricanes are driving the skyrocketing costs, Friedlander said Florida “had relatively mild hurricane seasons (no direct hits) from 2019-2021, yet the industry posted cumulative underwriting losses and net income losses in excess of $1 billion in each of those three years because of the litigation abuse impacts. The state’s insurance market was in a dire position before hurricanes Ian and Nicole struck last fall.”
Due to losses from litigation expenses, Friedlander said, seven residential insurers were declared insolvent over the last year, “and nearly half of Florida’s 47 domiciled regional insurers are on a financial watch list of the insurance regulator for the same reason.”
The Republican-controlled state Legislature and DeSantis have tried to address the litigation issue.
“The Florida Legislature passed a substantial property reform bill during a special session in December 2022, then followed with a sweeping tort reform bill in March 2023,” Friedlander said. “The focus of these bills is on eliminating the two key drivers of the crisis: one-way attorney fees and assignment of benefits (where a policyholder signs over their property claim to a third party). The legislation will help bring stabilization to Florida’s volatile property insurance market but it will not happen overnight. In fact, it could take several years as hundreds of thousands of lawsuits work their way through Florida’s court system.”
Others have argued, however, that the 2022 overhaul signed by DeSantis was too friendly to insurance companies and that other measures in the legislation will cause premiums to go up for some. For example, under the law, residents using Citizens Property Insurance Corporation — the state-backed insurer of last resort — would be required to switch to a private insurance company if the premiums are less than 20% higher than Citizens’ rates, the Pensacola News Journal reported. It also required that Citizens customers get costly flood insurance if their homes are in a flood zone.
Some Democrats argued that the legislation failed to directly curb rising homeowners insurance rates and should have included a rate freeze. And some worried it may make it harder for residents to sue insurance companies and would discourage them from filing legitimate lawsuits.
“Floridians are losing yet again,” House Democratic Leader Fentrice Driskell said in December. “I worry for our neighbors on fixed incomes. How many people are going to lose their homes before this ‘trickle down’ plan offers any relief?”
“It’s not a question about ‘helping’ the insurance companies,” DeSantis said at the time. “What it’s about is creating a market where people are going to want to do business in Florida. So the question is, how does that help the consumer? Well, if we do get more people to come and offer policies, you are finally going to have, potentially, choices. And that will allow you, I think, to make the best decisions for you.”
The reasons for the rate increases are complex, as are proposed solutions, and we’ll leave it up to readers to determine whether DeSantis has taken the right steps to rein in home insurance costs in Florida. But the governor’s actions were not the primary reason for the increases in the first place.
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