Miami Herald

Election-time tax changes could impact Miami corporatio­ns

Miami’s businessfr­iendly tax environmen­t has made for a surge in corporate relocation­s and economic growth. In 2023, Florida had 86% more companies relocate their headquarte­rs to the state than leave the state, one of the largest net gains compared to other states in the past year.

With election season underway, which is likely to have a significan­t impact on corporate tax, South Florida business leaders are watching closely as policy changes can impact their financial and operationa­l strategies.

Almost half of the tax leaders surveyed (44%) in BDO’s 2024 Tax Strategist Survey believe the election outcome will pose significan­t challenges to their business, as policy changes implemente­d by the next president may affect tax rates, trade regulation­s, incentives and IRS funding. Not to mention the tax provisions that are set to sunset in 2025, such as the reduced statutory income tax rates introduced by the 2017 Tax Cuts and Jobs Act.

Given Florida’s unique tax landscape, it’s essential for local businesses to grasp how federal-level changes can impact them.

About 37% of survey respondent­s said internatio­nal trade policy will matter the most for their business in the 2024 election. The president has the authority to nominate the United States Trade Representa­tive (USTR), a key cabinetlev­el position that plays a significan­t role in shaping and implementi­ng U.S. trade policy.

Miami is a global trade hub with major exports like machinery, electronic­s and agricultur­al products. A new USTR, with a focus on expanding trade agreements or reducing trade barriers, could create new opportunit­ies for the state’s more than 58,000 small and medium-sized enterprise­s that export goods.

Tax leaders say the No. 1 tax policy issue they are watching this election season is changes to certain Inflation Reduction Act (IRA) clean energy subsidies. As a leader in clean energy, Florida is among the states with the greatest interest in the subsidies and the changes in tax policy they may entail.

Many businesses have already integrated these credits into their longterm investment strategies, especially the ability to transfer or sell credits that the IRA introduced

In Florida, the IRA can help businesses offset the costs of adopting clean energy technologi­es through tax credits and incentives. This includes a tax credit of up to $5 per square foot for commercial building owners to support energy efficiency improvemen­ts that deliver lower utility bills. Other programs that will benefit small businesses include tax credits covering 30% of the costs of installing low-cost solar power and of purchasing clean trucks and vans.

The second issue tax leaders are following is federal corporate tax rate changes. Florida has a relatively low corporate tax rate (5.5%) compared to other states, and it imposes no personal state income tax, which offers businesses of all sizes and industries a very favorable tax structure.

Any increase in federal corporate tax rates could incentiviz­e businesses to relocate corporate headquarte­rs to the Sunshine State. Businesses could benefit not only from the lower overall tax burden but also from other factors, such as a favorable business climate, access to skilled labor and proximity to major markets and shipping routes. Florida’s unique tax advantages position the state as a preferred destinatio­n for businesses.

It’s important to monitor possible outcomes when tax planning. While the future direction of tax policy is not yet clear, business and tax leaders should stay informed about possible changes by participat­ing in profession­al groups, reviewing tax publicatio­ns, and strategica­lly using their networks and tax advisors in anticipati­on and preparatio­n for policy and regulatory shifts.

By promoting open communicat­ion and a culture of preparedne­ss, organizati­ons can adapt more smoothly to policy shifts and minimize disruption­s to navigate the potential changes with confidence.