A significant tax cut for Utahns is the key sweetening ingredient in a sweeping tax plan that state lawmakers have been assembling in recent months.
And while the most recent public version of the proposal does lessen the overall tax burden by about $80 million, nearly a third of individual tax filers would actually pay more, according to a legislative staff analysis.
Leaders of the reform push have been negotiating changes to the draft plan over the past couple weeks, and Rep. Robert Spendlove, a Sandy Republican and economist, says the tax analysis applies what he calls a “baseline scenario” that lawmakers will continue to refine.
“I think all of our goal is to have the overall package be a net tax cut for everyone,” Spendlove, who’s participating in these tax discussions, said in a phone interview. “And that’s what we’re really trying to achieve with this analysis is saying, ‘What will it take to get in that net tax reduction for everyone?’”
Thirty-one percent of tax filers would see an increase under this “baseline scenario,” which reflected a draft bill released earlier this month by a legislative task force. Many of those filers appear to be on the lower end of the income spectrum, according to a scatter plot of the reform plan’s impact.
Those who would be at greatest risk of a tax hike are people who can’t claim a personal exemption — such as young adults still listed by their parents as dependents. Many filers with two exemptions, a category that includes couples without children or a single parent with one child, would also pay more, a legislative staff analysis shows.
Description: This analysis from the Utah Office of the Legislative Fiscal Analyst shows the impact of a proposed tax plan discussed by state lawmakers. Each dot represents a single tax filer; those above the green line would experience a tax increase.
Nearly all parents with multiple children would experience a tax decrease, thanks largely to a proposal to quadruple the dependent exemption.
When asked to comment on the breakdown of tax cuts vs. hikes, a House of Representatives spokesman said the proposal has evolved since that modeling took place. He said he was unable to provide an updated analysis and noted that the task force is expecting to unveil a new proposed bill Friday.
House Speaker Brad Wilson, R-Kaysville, offered few details Wednesday about the forthcoming draft but said lawmakers are “making great progress” toward crafting something they can bring to a special session next month. The new version will tweak a list of newly-taxed service transactions, but Wilson said there are “not a lot of changes” from the draft the public has already seen.
Alliance for a Better Utah, a left-leaning good government group, believes lawmakers should balance tax cuts against the need for funding to support education and other vital government services. But if officials are dead set on tax reductions, they should target that relief to those struggling financially, argued Chase Thomas, the group’s executive director.
"We should be having tax proposals that help low-income individuals and families rather than giving these big tax decreases to those who already have money or who have large families," Thomas said.
The Utah director for Americans for Prosperity said bloated government spending and overtaxation creates barriers for state’s residents and faulted the proposal released earlier this month for failing to give everyone a boost.
“The goal should be to eliminate as many tax credits and exemptions as possible, while simultaneously lowering rates so that everyone benefits,” Heather Andrews of AFP-Utah said in a prepared statement. “This bill decreases some tax rates, but continues down the dangerous path of picking winners and losers with the way it arbitrarily selects sales tax exemptions and expansions.”
The current push to reform taxes started earlier this year with the formation of a legislative task force, which spent the summer on a statewide tour to hear from Utahns and convince them the government’s financial future is on shaky ground — largely because the sales tax base is eroding, they say. The panel’s two chairmen earlier this month rolled out a 182-page draft bill that sought to reinforce the state’s sales tax structure by increasing the sales tax on groceries, adding sales taxes to gasoline and certain services and repealing a list of tax exemptions.
To counteract those revenue increases, the current plan calls for a significant income tax rate decrease along with new credits and expanded exemptions. Overall, the proposal would yield a cut of about $132 million for individual Utahns.
While Wilson sounded confident Wednesday about progress on the plan, other members of the legislative task force are voicing concerns about the proposal and the process involved in its creation. Sen. Curt Bramble, a Provo accountant who sits on the task force, said he has “serious reservations” about the draft bill. In addition, pushing for a special session on taxes leaves lawmakers without a chance to present the proposal to their constituents and build buy-in, he said.
“The timing on this is very difficult because we don’t have time to make the case," Bramble, a Republican, said.
The increased food tax — a $250 million portion of the plan — has run into opposition from Democratic legislators and anti-poverty groups who say it would fall heaviest on low-earning families. Some of these advocates rallied at the Utah Capitol on Wednesday, calling on lawmakers not only to reject a food tax hike but to scrap the existing 1.75% state sales tax on groceries.
The plan does contain relief designed to blunt the impact that an increased food tax would have on low-to-middle earners, with grocery store credits and an earned income tax credit addressing intergenerational poverty.
But advocates and religious leaders Wednesday argued these offsets will not adequately compensate for the food tax hike.
“We want our legislators to understand a once-a-year rebate will not repair the harm done to families by this tax increase that will impact their budget every single week,” the Rev. Vinnetta Golphin-Wilkerson of Granger Community Christian Church in West Valley City said during the rally.
Rep. Joel Briscoe, a Salt Lake City Democrat and member of the legislative task force, said he’d recently met with House leadership to talk about the tax proposal — and conveyed his caucus’ opposition to lifting the sales tax on groceries.
“I’m not hearing any Democrats say that they can vote for the sales tax back on food,” he said Wednesday.
During their discussion of the tax proposal, members of the House Democratic Caucus suggested that a provision in the bill repealing the sales tax on feminine hygiene products was intended as a lure for bipartisan support.
Rep. Sue Duckworth, D-Magna, a moderate lawmaker who has sponsored several attempts to repeal the so-called “tampon tax,” told her Democratic colleagues on Wednesday that provision — which does not go as far as her legislation — would not be enough to earn her vote.
“It’s not going to fly,” she said. “I’m not going to cave with you guys, I’ll stick with you.”
Tribune reporter Benjamin Wood contributed to this report.