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Is proposed tax increase 1% or 17.5%? Depends on what you count, which could affect $750M ballot initiative

First Published      Last Updated Feb 07 2017 11:31 pm


Initiative » Poll says when voters are told of a total impact of the tax hike, they are hesitant.

Depending on how Utahns look at the Our Schools Now ballot initiative, their income taxes would go up by seven-eighths of 1 percent, or by 17.5 percent.

Both figures are accurate, as Our Schools Now would lift the income tax rate from 5 percent to 5.875 percent — a bump of less than 1 percent. But the practical impact of that change is a 17.5 percent increase in the dollars an income earner owes the state each year.

"Seven-eighths of 1 percent, from a marketing perspective, sounds really, really small," said Rep. Dan McCay, R-Riverton. "But when you put it in totality and put it into context, which I think people need, it may change opinions."



McCay is sponsoring legislation that would require organizers of a tax initiative, like Our Schools Now, to list and explain both figures.

But a new poll, released Monday by Libertas Institute and the Utah chapter of Americans for Prosperity, suggests a requirement to provide extra tax information could stop Our Schools Now's push to raise $750 million for public schools in its tracks.

The poll showed 50 percent of participants in support of raising the income tax rate by seven-eighths of 1 percent. But when told the change would cost the average Utah family of four $900 each year, 69 percent of participants said they were less likely to back the initiative.

The poll was conducted by The Trafalgar Group between Jan. 31 and Feb. 3. It included 1,050 likely Utah voters and has a margin of error of 2.98 percentage points.

"I think everyone would agree that whether it's legislators, Congress or people, the more information they have in front of them the better decisions they make," said Michael Melendez, Libertas Institute director of policy.

If passed, HB255 would require both the "tax percentage difference" and the "tax percentage increase" on the initiative's application to the lieutenant governor, the forms used to gather signatures throughout the state to qualify for the ballot, and the final ballot language.

Failing to include that information, according to the bill, would disqualify the initiative from reaching voters.

"I think it's an important transparency element that people understand the impact on their own life and their own homes," McCay said.

Our Schools Now has predominantly relied on the seven-eighths language, with organizers saying that, unlike legislative actions, ballot initiatives require easy-to-understand figures.

Recent polling, including a January Salt Lake Tribune-Hinckley Institute of Politics survey of 605 registered voters, have shown majority support for the initiative when asking about the move from a rate of 5 percent to 5.875 percent.

In response to McCay's bill, Our Schools Now released a statement that the 17.5 percent figure has been widely reported. The initiative would change the tax rate, he said, but the actual dollars Utahns pay would be affected by exemptions and credits.

"Representative McCay's bill does nothing to add to the public's knowledge of the bill," a spokesman said. "It is just an attempt to circumvent the public from fairly expressing their will through an initiative."

Melendez said the Trafalgar Group poll intentionally began with a question on the seven-eighths of 1 percent increase in order to track the shift in support when more information was presented.

"They're not calculating all of that," he said. "When you say its a 20 percent or a $900 [increase], that is more disclosure."

(The proposal would represent a 17.5 percent tax increase — less than the 20 percent in the poll question.)

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