In physics, you oversimplify objects by reducing them to a single point in space or a simple shape. A cow is reduced to a uniform sphere of milk. (That’s the running joke.)
This is what Utah legislators pushing the SB2001 tax reform package have done: reduced a complex 238-page tax overhaul to broad statements detached from the realities of life.
There is a seven-page summary of the law available. The scheme has three components: an income tax cut (reducing Education Fund revenue), new sales taxes (increasing unrestricted General Fund revenue), new credits and exemptions (intended to reduce hardships). Blend it and bill boosters tell you this is the largest tax cut in Utah’s history.
Actually, it’s more like that uniform sphere of milk. Dig deeper and you’ll find you’ve been served a load of bull.
Michelle Quist reminded us legislators knew they should have implemented changes when the 2017 Federal Tax overhaul resulted in higher state income tax collections. They didn’t. Now they want praise for fixing a problem entirely of their own making.
Educators also watched tax reform closely. This plan cuts the Education Fund dramatically, “transferring” higher education back to the General Fund to “hold harmless” K-12 education — for one year. It gives legislators flexibility to shove higher education back into the Education Fund, freeing sales tax revenue for other projects and limiting desperately needed future K-12 education funding.
You probably haven’t heard the plan being floated by legislators to make up the difference through property tax increases at the local district level. It will primarily harm the poor and those on fixed incomes through higher rents and taxes.
The elephant in the room is increasing food and gas taxes. Cutting the tax on unprepared food was a hard fought victory that took years before coming to fruition. People have to eat, so we buy food regardless of how good or bad the economy is — making this a stable source of tax revenue. I don’t recall the public clamoring to bring back the full sales tax on groceries in tax reform town halls.
The public didn’t ask for an increase in the gas tax either. In 2018, non-binding opinion Question 1 asked if the public would support an increase in fuel taxes of 10 cents per gallon. It was resoundingly rejected. The original premise of this tax reform process envisioned “broadening the base” and “reducing the rate” of sales taxes to stabilize sales tax revenue. This plan expands sales taxes to a small number of additional services but organizations with effective lobbyists remain exempted and sales tax rates remain unchanged. Except for food and fuel.
There are some good changes in the credits and exemptions. Increasing the income tax exemption for dependents is an overdue correction. Exempting menstrual products from taxation is positive. Benefits for those collecting social security and those experiencing intergenerational poverty are to be praised. However, grocery tax credits do not align with spending habits and there is nothing to mitigate the harm of drastically increased fuel taxes.
Make no mistake: This tax proposal is a long-term redistribution of tax revenue collection from the wealthy to the working class and poor. Sponsors of this bill acknowledge the maximum benefit of this tax overhaul flows to the wealthy. The wealthy don’t want this income tax cut and reject cutting the Education fund. The grocery tax is regressive and credits don’t change that fact when for those living paycheck to paycheck. Rural residents of Utah traveling long distances will be disproportionately harmed by the increased fuel taxes.
When 68% of Utahns oppose this law, those organizing a referendum vote of the people shouldn’t be pejoratively labelled as “Fringe.” Don’t be fooled by emotionally charged misinformation presented by the Utah Taxpayers Association either: opposing this law is not a vote to increase taxes.
Let’s ensure our legislators don’t just “listen” to hours of public comment. They need to hear us. Join us in putting the brakes on this tax overhaul. Go to eventbrite to find Utah 2019 Tax Referendum petition signing events near you. Let’s put this to a vote of the people on the same November 2020 ballot as the legislators who gave it to us.
Deborah Gatrell is a National Board Certified Teacher in Granite School District and a Utah Teacher Fellow alumna. She is deeply concerned about the potential impact of this tax policy on her students and their families. You can follow Deborah on Twitter @DeborahGatrell1 and the Fellows @HSG_UT.