Ronald Mortensen: Tax reform fiasco is setting the stage for a Utah Proposition 13

(Associated Press file photo) Then-California Gov. Jerry Brown, left, and Howard Jarvis, tax reformer and executive director of the California Apartment Owners' Association, one of the proponents of Proposition 13, during a news conference in Los Angeles on July 19, 1978. Proposition 13, the 1978 tax revolt initiative, placed strict caps on property tax increases that are still in place today. Although Brown opposed it, his embrace of the measure once it passed earned him the endorsement of Jarvis.

The Herbert administration and state legislators have turned efforts to modernize Utah’s tax system into a first-class fiasco that could lead to a citizens’ initiative for a California style Proposition 13.

They initially tried to sneak a bill through during the last days of the 2019 legislative general session that would have imposed a sales tax on all services. That resulted in an out pouring of opposition and they pulled the bill.

They then created a task force and gave a no-bid, $150,000 contract to a public relations firm in order to create support for so-called tax reform. A propaganda website titled “Stronger Futures” was built and the task force undertook a propaganda tour that ultimately failed in its quest to sway public opinion.

They then held a series of task force meetings at the capitol. Task force members compared citizens to a reservoir of funds to be tapped as needed by the state. They told citizens that property taxes add value to their properties. They said that people who have investment income don’t need their social security income and can afford to pay state income tax on it.

During hours of public comment, citizens castigated their elected officials’ propaganda efforts and half-baked tax proposals. Even the Grinch Who Stole Christmas spoke out against their efforts.

Task force members ignored repeated calls to get state spending, which has risen by 146% over the past 20 years while average household income only went up by 67%, under control and they refused to consider reducing the over one-half billion in sales tax exemptions granted to big businesses.

They went from a proposal that would have imposed the sales tax on all services to one taxing a few services to taxing almost no additional services. They did, however, include a proposed tax on free speech that would tax newspapers and newspaper subscriptions.

They then resorted to rearranging the chairs on the Titantic by re-imposing the sales tax on food and putting the sales tax on gasoline.

Food will be taxed because everyone has to eat even during an economic downturn. Gasoline will initially be taxed by 10-12 cents a gallon even though Utahns voted against a 10 cent per gallon increase. And certain property taxes will be increased automatically each year even though that will destroy the truth-in-taxation system which has kept property taxes under control. All of this will be done in order to ensure that government has stable sources of revenue.

Incomplete modeling shows that most people will receive a small tax cut but the models exclude taxes paid on online purchases and any future property tax increases. They also fail to acknowledge that many people will just get back to where they were before the dependent exemption disappeared in 2018.

So, after months of propaganda and Keystone Cop-like revisions to tax proposals, it now appears that citizens will pay more for food. They will pay more for gasoline. They will pay more in property taxes. Free speech will be taxed. Big businesses will keep their tax exemptions.

Utahns need to start thinking seriously about a Proposition 13 type citizens’ initiative that would strictly limit property and other tax increases and control spending.

If elected officials wish to avoid a Proposition 13, they had better listen to their constituents and focus on cutting spending and reducing corporate socialism rather than on government’s need for a stable, ever increasing source of revenue. After all, the government was created to serve the people, not for the people to serve the government.

Ron Mortensen

Ronald Mortensen, Ph.D., Bountiful, is co-founder of CitizensForTaxFairness.org .