A bill raising income taxes on the wealthiest Utahns -- aimed at helping to plug a $400 million hole in public and higher education funding -- flamed out Monday in the House Revenue and Taxation Committee.
Impassioned debate on Rep. Brian King's HB90 lasted more than an hour before the vote.
Rep. John Dougall, R-American Fork, labeled much of the discussion "questionable and inaccurate."
In 2008, Utah enacted a single-rate 5 percent income tax. King, a Salt Lake City Democrat, proposed upping that levy to 6 percent on incomes between $250,000 and $750,000 per year, and 7 percent on earnings above $750,000.
King said the "restoration" tax would affect less than 2 percent of Utah's taxpayers, and analysts projected the change would net between $100 million and $110 million a year specifically for education.
"Moving to a single-rate tax was a mistake" -- one that, combined with the economic downturn, blew a $1 billion hole in education coffers, argued Kory Holdaway, a former Republican lawmaker who now lobbies for the Utah Education Association.
Allison Rowland, budget director for the nonprofit Voices for Utah Children, said Utah millionaires pocketed an extra $15,000 annually, thanks to the tax shift. Those making $500,000 a year kept an average of $3,200 extra.
Even low-income earners fared a bit better, Rowland said, with those making $22,000 getting about $18 more.
Matt Frandsen, a Huntsville resident and founder of the Rings True Coalition, argued King's bill fails to go far enough. He recommended raising taxes on Utah's upper 10 percent, those making more than $100,000 a year.
Frandsen said the fiscal analysis for King's bill was overly optimistic, based on 2007 data before the economic crash.
Peter Cannon of Davis County's 912 project countered that tax progressivity is a move toward communism and that government's role is not to equalize conditions for those with less ability and drive.
"Everything you tax you get less of," Cannon said. "We want more of those making over $250,000."
Rep. Greg Hughes, R-Draper, moved that HB90 be returned to the Rules Committee, where it would likely see no further action this session.
Nine Republicans voted for Hughes' motion while four Democrats sided against it.
The dissenting votes were from Rep. Susan Duckworth, D-Magna; Rep. Tim Cosgrove, D-Murray; Rep. Carol Spackman Moss, D-Holladay; and Rep. Jennifer Seelig, D-Salt Lake City.
