"This is, I believe, Utah's current economic challenge: How do we propel our education system to a new high — so we can have the workers to keep our economy moving forward," said Zions Bank President Scott Anderson, one of the leaders of the initiative. "Simply put, we must significantly increase the state's investment in education to achieve the performance and results we not only need today, but we hope to have in the future."
Beginning next month, organizers will hold seven town hall meetings to hear from the public and, says Ron Jibson, the former Questar CEO, they plan to listen and adjust their proposal accordingly.
But let me get a head start, with a few suggestions that, in my opinion, would make the initiative stronger and more likely to achieve the goal of improving education in Utah.
Ditch the sales tax piece • Up until about a month ago, the initiative was focused exclusively on raising the income tax rate by seven-eighths of a percent to generate $700 million. But that apparently changed after talking with legislative leaders.
Last session, those Republican lawmakers proposed reversing a reduction on the sales tax on food, restoring the tax and cutting the overall tax rate so the changes wouldn't bring in extra money.
The problem they ran into was twofold: First, the data didn't support the notion that bringing back the sales tax on food would be a significantly more stable source of revenue. Second, any sales tax, but particularly the sales tax on food, slams low-income Utahns much harder.
Our Schools Now is falling into that same trap by including a half-percent sales tax increase. It would mean about $5 a month more in sales taxes for low-income Utahns on top of $10 a month more in income taxes — not a huge hit, but an unnecessary tax hike that brings in very little money and hurts families struggling to make ends meet.
When legislators were considering raising the food tax, they looked at giving income tax credits to offset the sales tax bump for the lowest-income Utahns. Our Schools Now isn't proposing that kind of tax credit, but it should. Otherwise, you're left with a regressive sales tax that ends up hurting thousands of Utahns who can least afford it.
Bring back progressive income tax • It's been a decade since Utah adopted a flat-ish income tax structure, getting rid of a system where wealthy taxpayers paid a higher rate and setting the base rate at five percent. It was a huge benefit for the rich, but it left schools on the starvation diet that Our Schools Now is trying to rectify.
Raising the income tax rate by half a percent across the board makes sense from an equity standpoint. But a better solution would be to restore higher rates for the very wealthy, a return to the philosophy that those who benefit the most from a robust economy and educated workforce should pay more for it.
Earlier this year, Sen. Jim Dabakis proposed raising the income tax rate to 7 percent for individuals making more than a quarter-million dollars a year, or couples making double that. That change would have generated $322 million for education.
Add a second tier at 6 percent for individuals making more than $125,000 and couples making more than $250,000, and you've dramatically boosted education funding without hurting working lower- and middle-class families.
The opponents will undoubtedly claim it will kill jobs, but that is far from clear. Look at the states with economies that have grown faster than Utah recently and you see Texas, which has no income tax, followed by California, which has a progressive income tax with rates as high as 13 percent for the top brackets.