Ruga and Kanter: We’re rich Utahns and we don’t need a tax cut

(Francisco Kjolseth | Tribune file photo) Utah's tax reform task force me at the Utah Capitol on Monday, Nov. 25, 2019.

As upper-income Utahns, we want to say loudly and clearly to the Utah Legislature: We did not ask for, we do not want and we do not need a tax cut.

Over the past year, legislative leaders have proposed modifying the Utah tax code to raise the sales tax on groceries and gas, while applying it to many previously exempt products. Because these legislative leaders want to claim that tax reform will be revenue neutral, they propose offsetting new sales tax revenue with an income tax cut.

This change is being sold as a win-win for everyone, a tax cut across the board, but in reality it’s a plan that primarily benefits wealthy Utahns. A recent analysis showed that the top 20% of income earners stand to benefit more than the bottom 80% of Utahns combined.

The proposal as a whole is a complicated package of tax cuts, tax increases and tax credits, all shifting on a weekly basis, but the end result is that the rich get richer while housing costs continue to skyrocket, adequate health care remains out of reach and the K-12 education system loses funding.

If the Legislature wants to pass a tax bill that helps all Utahns, they need to go back to the drawing board.

Under the current proposal, all Utah consumers will end up paying more for the basics. The cost of putting food on the table will rise over 3%. Need tutoring for your kid? Taking a road trip or have a commute for work? It will now be more expensive.

The argument for these proposed changes? We are witnessing a structural shift in our state’s economy. The increased sales taxes will be offset by new credits. And the income tax cut will encourage business and job creation. Yes, the economy is changing and tax reform likely makes sense. And while economists will argue that tax credits provide a surgical approach to helping the intended beneficiaries, in the real world there will be tens of thousands of low-income Utah households that will never file for these tax credits or can’t wait till the end of the year to get them.

And one look at our business economy will tell you that we don’t need an income tax cut to further encourage business growth in our state, particularly at the expense of our education system and our already struggling lower income residents. Which brings us to the truth about this proposal: It is a regressive approach to tax reform that will make daily life more expensive for those who can least afford it, while benefiting those who need it least.

This proposal is yet another ill-conceived, rushed effort at legislating in the dark, catering to special interests and represents a blatant display of the values our legislative majority truly holds dear. And the price will be paid by two groups with minimal voice on capitol hill: low-income Utahns who will be hurt by the increased sales tax on food and gas, and our K-12 public education system that will suffer the consequences of the income tax cut.

Hundreds of thousands of Utahns, whether they consider themselves poor, working class or middle class, are barely scraping by. Even many who consider themselves financially secure are just one medical bill away from financial disaster. With so many struggling, this tax reform — which hurts those who can least afford it and helps those who don’t need it — is a moral travesty.

We urge our legislative leaders to start over. Use the tax code to reduce inequality, not add to it; to promote competitiveness, sustainability and safety in our community for generations to come, not to provide a short-term, unnecessary boost to those who don’t need it. The plan currently being considered is the wrong approach for the challenges our state faces today.

Jonathan Ruga

Josh Kanter

Jonathan Ruga is the founder of Sentry Financial and a member of the Utah Chapter of the Patriotic Millionaires. Josh Kanter is the founder of the Alliance for a Better Utah.