Now the Jacksonville-based railroad operator is pursuing a state tax break that is supposed to stimulate capital investment in Florida. And the company says it expects to qualify in large part by spending some of the money it made from the SunRail sale — on work it was already committed to do.
In each case, the company's capital spending would have happened without the tax incentive.
Publix Super Markets Inc., for instance, says it will meet the $250 million spending threshold through its normal cycle of building new grocery stores, remodeling existing ones and expanding warehouses. TECO Energy Inc. says it will do so through the regular maintenance of Tampa Electric's power plants, transmission lines and other infrastructure.
The other two companies pursuing the break, utility operator NextEra Energy Inc. and phosphate miner Mosaic Co., were identified as single-sales-factor candidates by Florida officials six months ago. NextEra is spending $3.7 billion this year to maintain and expand Florida Power & Light's infrastructure, while Mosaic is building a dry-products handling facility at the port of Tampa — all work planned even before the Legislature passed the single-sales-factor law.
Some critics deride the break as a form of "corporate welfare" and question whether Florida is realizing any benefits from a tax cut that analysts expect will eventually cost $4 million to $14 million a year in lost tax revenue.
"There is no statistical proof these tax breaks are better than giving the money back to the taxpayers," said Matthew Falconer, an Orlando developer and conservative activist. "The fact that the beneficiaries of this legislation are the major donors to politicians in Tallahassee is disturbing to most taxpayers."
The five companies, whose 2011 profits ranged from $273 million to $2.5 billion, together donated more than $8 million to Florida political parties, candidates and committees during the 2010 election cycle, according to state records.
Each of the businesses has an enormous footprint in Florida. That's important because using the single sales factor to calculate a company's Florida income taxes — which considers only its sales in the state, rather than its sales, employees and property — results in lower tax bills for companies that have a large physical presence in the state but sell their products over a wider area.
NextEra and TECO, for instance, own billions of dollars' worth of power plants and equipment. CSX has more than 2,800 miles of track and major rail yards in Jacksonville, Tampa and Orlando
More than 70 percent of Publix's grocery stores, plus seven of its eight primary distribution centers and four of its six manufacturing facilities, are in Florida. All four of Mosaic's wholly owned phosphate mines are here.
All but Mosaic also have their corporate headquarters in the state.
The five businesses have other traits in common as well.
Each has a seat on the board of Florida TaxWatch, according to the organization's most recent tax records. The business-financed think tank was the leading proponent in Tallahassee of the single sales factor, producing research predicting it would "stimulate capital investment, job creation, corporate relocation and retention."
"Right now, the very first companies are those who, understandably, most likely had plans under consideration to expand in Florida," said TaxWatch President Dominic Calabro. "But I'm still convinced that it's a good thing to have tax laws that encourage you to bring your capital and your employees inside Florida."
Some lawmakers and activists are particularly upset that CSX is in line to get the tax break, however.
CSX should have little trouble reaching the $250 million capital-spending threshold. The company said it expects to reach that amount on the basis of ongoing rail maintenance plus one specific project: improvements to its "S line," which runs through the interior of the state.
Even if it didn't receive a tax break, CSX would have to do that project, because the S line must be able to absorb an expected increase in traffic as the company's freight trains are rerouted to make way for SunRail.
But what is most galling to the company's critics is that CSX will pay for the work with the money it got from the state for the SunRail corridor. Of the $432 million that CSX was paid, $198 million was specifically designated for the S line work.
"Giving a tax break to corporations who make capital improvements with our tax dollars, and not their investment, is a slap in the face to the taxpayers of Florida," said Sen. Paula Dockery, R-Lakeland.
A spokesman for CSX said the company hasn't yet decided whether it will actually use the single sales factor to calculate its corporate-income tax in Florida. The law, passed during the final hours of the Legislature's 2011 session, was rewritten late in the process to allow businesses to switch between the standard formula and the single sales factor each year, based on whichever is more favorable for them.
One influential lawmaker plans to take another look at the law. State Sen. Don Gaetz, a Niceville Republican who will take over as president of the Florida Senate after the November elections, said he will instruct senators and staffers to review the single-sales-factor law along with other tax incentives.
"That could lead to adjustments or improvements in tax policy next session," he said.
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