A bill continues to advance through the Florida Legislature that takes a decades-old tax benefit away from international banking in order to help fund Miami Dolphins’ stadium upgrades. If passed, international banking, an industry with a proven track record of job creation and economic benefit, will be sideswiped so a sports team can add a partial roof and move some seats closer to the field.
To put this economic development travesty in sports terms: Eliminating this tax exemption in favor of a football stadium is like trading a Pro Bowl quarterback in his prime for an unproven seventh round draft pick. No NFL general manager in his right mind would do that, but a huge negative economic shift could become reality if our lawmakers don’t change course.
Here’s the background: In 1984, Florida amended the tax statutes to provide a corporate income tax exemption for income generated from a particular type of international banking activity. The exemption for “eligible net income from an international banking facility” was created as an incentive for banks to locate their international banking offices within Florida and to remain competitive with 11 other states, including New York, that had and continue to have a similar tax exemption.
Proponents of the stadium legislation want to end the tax exemption, force banks to pay new taxes on these specific transactions and funnel any new revenue to the Dolphins for the stadium renovation.
This plan makes very little sense for a number of reasons.
Florida International Bankers Association (FIBA) analysis indicates that international banking and related activity contributes more than $1.8 billion in economic output to Florida’s economy yearly, supporting nearly $1.2 billion in Gross State Product, 13,600 employment positions paying $589 million in compensation to Florida workers. In addition to these impacts, international banking and related activity generated $89 million in revenues to state and local governments in the last year.
The numbers only tell part of the story.
A robust international banking community contributes to the overall economic growth of our region and our state. The Miami-Dade real estate market owes much its recent recovery to international buyers, who work closely with their international bankers. New construction on Brickell Avenue and in downtown Miami has been bolstered by the international market.
Condo units, sitting dormant throughout the county for years, were scooped up by international buyers who have transformed these non-performing assets into taxpaying, grocery buying, and entertainment consuming households.
A practical argument against the legislation also exists. International banks have a choice as to where to locate these operations and can easily choose to move the jobs associated with these transactions to another state. Many of these are well-paying, solid jobs being held by local employees who may not be relocated.
Further, if international banking jobs are moved to another state like New York, then the banking activities will be managed in New York — and not generate any revenue for the stadium. It turns out to be a lose-lose. And even worse, if the international banking tax benefit is taken away and the Dolphins referendum is defeated (a likely possibility) then everyone loses: the banks, Florida and the Dolphins.
International bankers are not alone in their opposition to this legislation. The Downtown Development Authority, the Greater Miami Chamber of Commerce, and the Florida Bankers Association all support FIBA and its efforts to defeat the anti-bank aspects of the legislation. The Florida Legislature needs to reassess its position on this bill. Stadium upgrades are a fine goal but not at the expense of hundreds of jobs that generate tremendous benefits for our community.
David Schwartz is CEO of the Florida International Bankers Association.