In the most recent session of the Utah Legislature, House Bill 441 — the effort to overhaul Utah’s tax system by expanding sales taxes on services and removing certain exemptions – did not pass because of a failure to educate Utahns about our state’s financial situation and a lack of public input.
House Democrats wanted to explain why the legislature was talking about tax reform and listen to what Utahns wanted on this important issue. We hosted seven town halls in Salt Lake City, West Valley City, Ogden, Provo, Sandy, Holladay and Heber City. We talked about why tax reform should be considered, presented a simple explanatory video, and invited members of the public to share their opinions through an interactive poster session and an online survey available for those who couldn’t attend in-person.
We presented 12 tax reform options: expand sales/consumption tax base (essentially H.B. 441), raise rates, a statewide property tax, eliminate restrictions on revenue use (earmarks), eliminate the education fund, eliminate tax credits/exemptions, a tourism tax, a carbon tax, a gross receipts tax, tax sports gambling, a statewide lottery, and a transportation user fee.
We also posed three questions: Should tax reform be revenue neutral, revenue cutting, or revenue raising? Who should bear the greatest burden? And how quickly should new plans be implemented?
Here is what Utahns who participated in the process told us:
• Be careful with taxing more services. The option to broaden sales taxes received the most comments, mostly negative. We got a variety of opinions, such as: “Yes, but with nuance to protect new business/lower-middle class,” to “We need research on impacts of each area sales tax. Implementations can also have unintended consequences,” to opposition: “No way. This will pyramid taxes and result in taxes being incurred at every step along the way.”
• People favor a carbon tax. The most popular option was a tax on carbon emissions. This option received the second most comments overall and by far had the most positive comments (78 percent). Most comments expressed support for raising revenue while reducing emissions, but also to avoid hurting rural Utah communities that have historically relied on fossil fuel extraction as we transition to a sustainable energy system.
• Opposition to eliminating the education fund. This option received the most negative comments. Attendees opposed removing the state constitution mandate that all income tax revenue go towards education funding. Most said education is already underfunded. One commenter said: “Regardless of how well intended, the optics of taking from education — or simply not protecting education — are bad. Perhaps remove higher ed but public ed must be fully funded.”
• Many support raising tax rates. Raising the income tax, especially in a progressive fashion, was a popular option among town hall attendees. In addition to raising revenue from those able to afford it, respondents also liked that it was a simple adjustment that most taxpayers would understand. Negative comments centered around burdening Utah taxpayers who can least afford to pay more, especially if sales tax rates are increased.
• Raising revenue. Roughly two-thirds of the attendees felt tax reform should be revenue raising, as opposed to revenue neutral or reducing. Most commenters said corporations and wealthy individuals should bear more burden for imposed taxes. And many commenters supported a deliberative, phased process for doing tax reform in the next couple of years. For example, one person said, “Do it this year or next, but do a thorough fiscal study to understand the true impacts.”
You can read our full report, along with the full list of comments at utahhousedemocrats.org, which we are submitting to the Legislative Tax Reform Task Force for review. We hope the task force will carefully listen to the public’s concerns and consider all of the many options we have for tax reform as they move forward.
Unless tax reform delivers a net benefit to the people of Utah, it’s not worth it.
Submitted by Rep. Brian King, D-Salt Lake City; Rep. Carol Spackman Moss, D-Holladay; Rep. Angela Romero, D-Salt Lake City; and Rep. Karen Kwan, D-Taylorsville.