The Florida House of Representatives voted to revoke Disney World’s special tax status after clashes between the company and Governor Ron DeSantis over the “Don’t Say Gay” Bill. Disney has traditionally been allowed a special tax district, giving the company greater control over its property in Florida.
Eleanor Wilking, professor of law at Cornell Law School, studies tax policy, tax administration and employment law.
“By some estimates, Disney World earns nearly $20 million in profits per day, so the cost of a few million dollars a year in additional tax revenue is unlikely to have significant financial consequences.
“However, there might be significant consequences for the two counties that will need to absorb Disney's special tax district, Orange and Osceola. These two counties will have to take over funding and administration for the Disney special district and, because local governments in Florida are highly dependent on property taxes, there could be significant transition costs. Most of which will likely be borne by residents of the counties in the form of higher property tax rates.
“The Florida state government is unlikely to be affected in the short term, as the vast majority of state revenue comes from consumption taxes (sales taxes, sin taxes, hotel taxes, etc.). However, Disney World is a massive tourist attraction that brings in a lot of business for entities other than Disney, as well as significant consumption tax revenues from out of state residents. Although we are far from this point, it is conceivable that this very public fight and the loss of control that eliminating the special district entails will cause Disney to reconsider future investment in the state.
“I think this fight between Disney and Governor DeSantis highlights the dilemma for other large, public companies that are located, or have significant operations, in conservative states. On one hand, many of these states are attractive to these businesses because they are generally low-tax and low-regulation jurisdictions. Some could even have their cake and eat it too, by investing heavily in local politics to influence things that their workers care about, like public services and school quality. The cities of Austin and Nashville are perhaps the most widely known examples of this phenomenon.
“However, the pandemic really brought conflict between liberal localities and conservative state governments over public health to the forefront, and this trend has continued with cultural issues. It will be interesting to see if these conflicts alter corporations' calculus about where to invest. Again, taxes are part of this decision, but they may not be determinative.”