Deconstructing Disney

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Apr 25, 2022 View in browser   By Bernie Becker BACK TO THE SUNSHINE STATE: The showdown between Gov. Ron DeSantis and Disney in Florida has gotten lots of attention, and for a variety of reasons. From a tax perspective, that's because the Republicans' decision to pave the way for tossing out a special tax district created for Disney has sparked a lot of interest in how that might cause residents living near Disney World to pony up more in taxes, and also shined a light on the various other tax benefits that the company currently receives in Florida. But in the broadest sense, one of the big reasons that people seem to be paying attention to what's happening in Florida is that it illustrates how much cultural issues appear to be the primary motivator for Republican officials and their base these days. And, well, it's fair to wonder about the potential implications for taxes there, too, given the decades and decades that Republicans have prided themselves as the party of low taxes. First, on the more narrow policy developments: Here's a figure that's been getting a lot more attention in recent days — $163 million. That's how much nearby local officials say that Disney pays for services within the current Reedy Creek Improvement District. And if Reedy Creek actually is dissolved next year, then local residents will have to pick up the tab for things like sewer upkeep and fire prevention. Scott Randolph, the Orange County tax collector (and a Democrat), has been making this point quite visibly — he did a CNN interview over the weekend, for instance. One of his main points: The county will likely have to raise property taxes significantly if Disney's special tax district is eliminated. Getting less attention: It's not like the Reedy Creek district was the only way that Florida Republicans could retaliate against Disney for its advocacy against a controversial new law in the state that limits how teachers can talk about gender and sexuality. As Bloomberg notes, it was only about two years ago that Florida finalized some $578 million in tax breaks that will be giving Disney a boost through 2040, in exchange for the company bringing 2,000 high-paying jobs to the state. DeSantis has said that he doesn't want to give Disney "special treatment" following its lobbying on the education, but critics have said that the hundreds of millions of dollars in tax credits might even be a better illustration of the state's previously cozy relationship with the company. A spokesperson for DeSantis said the governor didn't target the tax breaks because a wide range of companies can seek them, so it's not a special carve-out just for Disney. MORE ON THAT IN A BIT , but first welcome to the "we already had to turn on the air conditioner" version of Weekly Tax. There were a lot of lovely tributes to the late Sen. Orrin Hatch over the weekend, after he died at the age of 88. But our favorite was definitely "Sen. Orange Hat." (Though let's be honest — Orrin Hatch on legalizing medical marijuana isn't bad either.) It's been out there awhile: Today marks 32 years since NASA first deployed the Hubble Telescope — and it's still working out there in space somewhere. (Five separate space shuttle missions have made repairs to Hubble, which might be operational for another 15 years or so.) Help us capture the global view. Send your best tips and feedback. Email: bbecker@politico.com, bfaler@politico.com and teckert@politico.com. You can also reach us on Twitter at @berniebecker3, @tobyeckert, @brian_faler, @POLITICOPro and @Morning_Tax.   JOIN US ON 4/29 FOR A WOMEN RULE DISCUSSION ON WOMEN IN TECH : Women, particularly women of color and women from disadvantaged socioeconomic backgrounds, have historically been locked out of the tech world. But this new tech revolution could be an opportunity for women to get in on the ground floor of a new chapter. Join POLITICO for an in-depth panel discussion on the future of women in tech and how to make sure women are both participating in this fast-moving era and have access to all it offers. REGISTER HERE.     Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. NOW FOR THE BROADER VIEW: Look, no one's saying that Republicans are suddenly going to oppose tax cuts. After all, Republicans in Florida aren't going after hundreds of millions of dollars in tax breaks for Disney. GOP officials in Washington remain universally opposed to the tax increases being proposed by Democrats. Meanwhile, the 2017 tax cuts remain potentially the biggest legislative achievement that Republicans had while President Donald Trump was in office, and Republican states around the country just passed a slew of permanent income tax cuts. But critics have said that the GOP's targeting of Disney isn't in keeping with their reputation for being champions of limited government, an approach that includes keeping tax burdens low — meaning it might be fair to wonder how often Republicans will prioritize cultural issues over economic ones in future situations like that. And there certainly are some Republican tax specialists who at least suggest that cultural issues are and should be more of a focus for the party these days, because companies like Disney are becoming more comfortable publicly backing liberal social policies. Ryan Ellis, a conservative tax lobbyist, told Weekly Tax in an email that he wasn't "one of those people who think we should just focus on lower taxes, lower spending, less regulation, sound money, and go home." "We need to defend ourselves," he added. At the same time, there are conservatives who have seen this trend coming for awhile, but still aren't happy about it. "The only things unifying the right these days is cultural conservatism and contempt for the left," said Brian Riedl of the Manhattan Institute, who argued that going after narrowly tailored tax benefits shouldn't be done as retaliation for a company's views. "Even when it was pointed out that Florida's reforms may actually raise taxes, the leading conservative response showed a more populist, anti-business, and anti-corporate welfare populism on the right that has been accelerating ever since the Wall Street bailouts and the tea party," Riedl added. Around the World LOTS OF PEOPLE WANT LOWER TAXES: Thousands of farmers in Argentina descended on Buenos Aires over the weekend to protest for lower taxes, Reuters reports. Farmers haven't been happy with how President Alberto Fernandez's administration has sought to curb inflation on food prices, and pushed for tax cuts in a letter sent to the government. The leftist Fernandez succeeded a conservative, former President Mauricio Macri, but both presided over tax increases. Argentina, one of the world's key food exporters, now levies a 12 percent export tax on wheat and corn and 33 percent on soy and flour. "We are no longer willing to fund the rope that is being used to choke us," the protesters' letter read in part. Across the Pacific Ocean a bit: Prime Minister Scott Morrison has vowed to limit the amount of taxes that Australia collects if he wins reelection, Bloomberg reports. The center-right prime minister faces voters next month, with Australia facing many of the same inflation pressures as residents of other countries. Morrison has pledged to keep revenues at no higher than 23.9 percent of gross domestic product, and to offer A$100 billion, or around $72 billion, in tax cuts to workers over the next four years. Around the Nation DID WE SAY TAX CUTS? The Arizona Supreme Court ruled late last week that voters in the state can't overrule tax cuts put into place by the GOP legislature and signed by the governor, The Associated Press reports. Gov. Doug Ducey, a Republican who appointed six of the seven justices on the Arizona high court, praised the decision as "another big win for our state's taxpayers." The decision also marks the second time in pretty short order that the Arizona Supreme Court has sided with Republicans on a big tax issue. The court also essentially overturned a 2020 voter referendum that that would have hiked taxes on the rich to pay for education initiatives. In this case, liberal activists had collected enough signatures for another ballot referendum — though this one would have overturned close to $2 billion in tax cuts signed by Ducey. A conservative group had challenged the ballot measure, saying it ran afoul of a constitutional provision that bans referendums on measures that support and maintain the state government. The high court agreed, overturning a lower court decision that said that "support and maintenance" applied solely to measures that appropriate money, not tax cuts.   INTRODUCING DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER, RE-IMAGINED:  Technology is always evolving, and our new tech-obsessed newsletter is too! Digital Future Daily unlocks the most important stories determining the future of technology, from Washington to Silicon Valley and innovation power centers around the world. Readers get an in-depth look at how the next wave of tech will reshape civic and political life, including activism, fundraising, lobbying and legislating. Go inside the minds of the biggest tech players, policymakers and regulators to learn how their decisions affect our lives. Don't miss out, subscribe today.     Quick Links Bloomberg Tax: "Fixing the IRS: Troubled Agency's Needs Run Deeper Than Funding." Baltimore Sun: "This tax break costs Baltimore taxpayers millions each year. The city wants to make it bigger." CoinDesk: "Crypto Taxes Fall Under EU Lawmakers' Gaze." Did you know? The Hubble Telescope only uses about an average of 2,100 watts of power — or the equivalent of around five refrigerators.   Follow us on Twitter Toby Eckert @tobyeckert Bernie Becker @berniebecker3 Brian Faler @brian_faler Aaron Lorenzo @aaronelorenzo   Follow us

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