Utah lawmakers voted overwhelmingly for a $30 million tax cut Wednesday in the form of an increased child tax credit for families.
The state tax cut is intended to soften the blow of recent federal tax changes to middle-income earners with children. Those changes increased the standard income tax deduction while eliminating personal and dependent benefits, which led to some families with more than two offspring seeing a net increase in the taxes they owed.
Rep. Tim Quinn, R-Heber City, sponsored a larger tax cut for families during the general session that ended in March that would have totaled $63 million. But despite warnings that no action would pinch big families with higher taxes, that legislation faltered.
On Wednesday, Quinn said the smaller tax cut would eliminate roughly 45 percent of the hit some families experienced.
“It does get us a good step in the right direction,” Quinn said. “This is the right thing to do for the working familes of Utah.”
The House voted 67-3 for the child tax credit, which was included in a larger bill dealing with the ability of corporations to carry forward a net operating loss to future fiscal years. It was later approved by the Senate without debate in a unanimous vote.
During the lead-up to the Legislature’s special legislative session Wednesday afternoon, few details were known of the child tax credit and other taxing proposals as Quinn was traveling.
Sen. Jim Dabakis, D-Salt Lake City, questioned why his colleagues' priority was to relieve the tax burden of families with the most children, rather than families with the least income.
“We’ve decided to help large families instead of helping poor familes, and that’s a mistake," Dabakis said. “I think it’s immoral. I just don’t understand that kind of thinking.”
That point was also raised on the House floor by Rep. John Westwood, R-Cedar City, who unsuccesfully sponsored an earned income tax credit for the state earlier this year.
“Wouldn’t the earned income tax credit help more familes, 25,000 low income famies within the state, at a fifth of the cost?” Westwood asked.
Quinn said he supports an earned income tax credit. But he said that issue is worthy of future consideration, separate from the question of how to help families stung by federal tax reforms.
“This bill only meant to hold harmless what the federal legislation did,” he said. “I’m in full support of the earned income tax credit, but this bill would not address that.”
The per-child credit was one of several changes to Utah’s tax laws adopted by lawmakers during Wednesday’s special session. Other bills dealt with the collection of online sales taxes and the taxation of corporations with foreign sources of income.
Some of those bills were still being drafted Wednesday. And members of the Revenue and Taxation Interim Committee during their morning meeting expressed concern with an apparent about-face on legislation they had debated and voted on as recently as last week.
Rep. Travis Seegmiller, R-St. George, questioned who was driving the tax policy shift, if not the committee assigned to that area.
“I’m trying to figure out what was the point of me even being here on Thursday," he said.