ORLANDO, Florida. – Disney – “the place where dreams come true” – was recently stripped of its special tax status, which could negatively impact the theme park juggernaut and the citizens of Florida. This news comes shortly after Disney spoke out against a Florida bill called the Parental Rights in Education Bill, which critics call the “Don’t Say Gay” bill.
By speaking out against the legislation, Disney could serve as a warning signal to other companies wanting to participate in the political conversation and how it could impact their bottom line.
Governor Ron DeSantis and the State Legislature revoked Disney’sspecial tax status, a 55-year-old law that created the Reedy Creek Improvement District. This special status gave Disney the freedom to operate as its own mini-government.
On the plus side, Disney made its own planning and construction decisions. The multi-billion dollar company would also be responsible for its own maintenance, fire and medical response services and, most impressive of all, the company would have to generate some of its own electricity.
This special arrangement allowed Disneyto save millionsdollars annually.
“If Disney wants to fight, they picked the wrong guy,” DeSantis proclaimed.
Disney is already Central Florida’s biggest taxpayer. Between 2015 and 2020, theamusement parkpaid over $280 million in property taxes.
Ending the special status Disney has enjoyed since construction began in 1967 could be seen as retaliation for theamusement parkweighing on a heated political debate that the whole country is talking about.
Whispers of the Parental Rights in Education Bill caused an uproar in the LGBT community, and businesses were quick to speak out against the bill. Disney involvement represents a dangerous reality for American businesses today: taking sides in political affairs might appease your customers, but still expose you to financial risk.
No longer operating in its own special area, Disney will have tonegotiatewith the local governments of the departments of Orange and Osceola. Unfortunately, this is bad news for residents, who could face a 20% tax hike.
“It’s a big deal,” saysEdith readsprofessional investment writer and personal finance coach, “because it means the company will have to start paying property taxes on all of its holdings in the city.”
However, Ms Reads does not believe this will lead to an increase in ticket prices or a change in parking times. Instead, she’s excited for what’s to come. “I think it could be good for the business because it will force them to be more innovative and competitive,” she says.
“Disney losing its tax-protected status is a wake-up call for political activists at other companies and also for real estate developers getting into politics to be careful,” David Reischer told Wealth of Geeks.
Mr. Reischer is a lawyer and CEO ofLegalAdvice.com. He believes that “unbridled political activism can affect the bottom line” of these companies that weigh in on political affairs.
Furthermore, it warns companies to “think twice before allowing stakeholders within the company to encourage senior leaders to speak out about political matters unrelated to their business model.”
Leonard Ang, CEO ofiPropertyManagementan online real estate resource, is more optimistic about Disney’sfuture. “This is going to result in a slew of new development-friendly deals for Disney,” he says.
In fact, Colorado Governor Jared Polis hashas already invited Disney to moveto his condition.
The 25,000 acre district of Reedy Creek includes Disney’sfour theme parkstwo water parks and two small towns: Bay Lake and Lake Buena Vista, where Disney employees and representatives make up a combined population of 53 people.
The changes will take effect in June 2023 and could have serious implications for Florida residents, especially those not directly affiliated with Disney in Orange and Osceola counties.
Their financial documents show bond liabilities between $1 billion and $1.7 billion.
“A repeal of Disney’s Florida self-government status could leave local taxpayers with more than $1 billion in bond debt,” reportsCNBCan amount that could represent $1,000 per taxpayer.
As fears abound for the future of Disney World developments and the tax burden on Florida residents, this controversy could change the way corporations engage in politics.
Disney saw a slight drop in its stock market value. Still, it’s too early to tell what long-term effects this new legislation will have on Disney and Florida residents. Time will tell if the happiest place on earth can make peace with the government of Florida, turning the simple mission of “It’s a small world after all” into reality.
This post was produced and syndicated by Wealth of Geeks.