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How have other states or countries replaced property taxes and what lessons apply to Florida?
Executive summary
States and countries that have tried to replace or sharply reduce property taxes most commonly did so by shifting revenue to other broad-based taxes (sales or income) or by increasing state transfers to local governments; those approaches carry clear trade-offs between efficiency, equity, and local control and can leave big budget holes—Florida faces an estimated $43–$55 billion annual property-tax footprint to replace [1] [2]. Available sources do not mention any country that fully eliminated property taxes without substituting comparable revenue elsewhere; U.S. examples and policy proposals focus on swaps, rebates, exemptions, or state backfills [3] [4].
1. What other places actually did — tax swaps, rebates, and state backfills
Several U.S. efforts to reduce property tax burdens have relied on “tax swaps” in which states raise consumption or income taxes or expand exemptions while using state revenue to backfill local budgets; analysts warn these swaps often substitute one tax burden for another and require sustained state-level revenue or spending limits to be viable [3] [4]. Policymakers also use one-time rebates or expanded homestead exemptions to provide temporary relief, but advocates stress those stopgap measures do not eliminate the structural need for roughly tens of billions in annual revenue that property taxes currently provide in Florida [3] [2].
2. Budget arithmetic: how big is the hole Florida would need to fill?
Reporting and analyses place Florida’s annual property-tax role in local finance in the tens of billions: news coverage cites roughly $43 billion as the gap if property taxes “go away,” while policy groups report total levies in the $50–55 billion range—numbers lawmakers invoke when weighing replacements [1] [2]. That scale matters: replacing $40–$55 billion reliably requires either major state tax increases, cuts to local services, or constitutional changes that shift funding formulas [1] [2].
3. Who pays under replacement options — distributional effects
Shifting from property to sales taxes tends to make the tax system more consumption-based and can be regressive—hurting lower-income households—while income-tax options would change Florida’s longstanding no-income-tax stance and face political resistance [1] [5]. Proponents of swaps argue businesses and non-homestead properties would bear more of the load if homestead exemptions are expanded, but fact-checking shows a large share of property-tax revenue already comes from non-primary residences and commercial property—about 64% in preliminary 2025 data—so distributional outcomes depend heavily on which property classes are targeted [6].
4. Local services and control: the political and practical trade-offs
Property taxes fund core local services—schools, police, fire, parks—so eliminating them without a clear replacement would force cuts or state-directed funding shifts that reduce local fiscal autonomy [7] [8]. Critics warn that moving revenue responsibility upward to the state can weaken local accountability and leave communities with fewer tools to respond to growth or emergencies; defenders of swaps counter that state backfills can equalize resources across districts if designed transparently [7] [3].
5. Lessons for Florida: what reporting and analysts emphasize
Analysts and advocacy groups urge caution: any durable change must pair tax changes with spending limits or governance reforms, because simply replacing property taxes with state revenue without curbs invites future revenue pressures or “cost shifts” back to homeowners [4] [7]. Florida policy debates already include a menu of options—rebates, bigger homestead exemptions, levy limits, or sales-tax swaps—but there is no consensus and previous ballot/legislative efforts have failed to meet thresholds or have been vetoed [3] [9].
6. Competing narratives and political context
Political actors frame the choice differently: proponents (including Florida’s governor and some conservative groups) call for bold elimination or major relief and pledge “no tax hikes,” arguing that inefficiencies and overspending should be solved without raising state taxes [5] [10]. Opponents warn that elimination would “wreak havoc” on local services and emphasize the scale of revenue at stake; local officials and policy analysts ask for concrete replacement plans before backing radical change [10] [8].
7. Bottom line for policymakers and voters
There is no evidence in the current reporting of a country that eliminated property taxes without substituting comparable revenue; successful, sustainable shifts require clear numbers, a durable revenue source, and institutional changes to control spending growth. Florida’s debate hinges on whether voters and legislators accept revenue-neutral swaps, temporary relief tied to surpluses, or a permanent restructuring that changes who pays and how local services are governed [4] [2]. Available sources do not mention a one-size-fits-all model; each approach carries explicit fiscal and distributional trade-offs that Florida must confront [3] [7].