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Judy Weeks Rohner: Utah should cut the tax on food, not the income tax

Income tax cuts benefit the rich while sales tax on food hurts the poor.

(Trent Nelson | The Salt Lake Tribune) Judy Weeks Rohner, left, turns in signed tax referendum petitions to staffers at the Salt Lake County Clerk's Office in Salt Lake City on Tuesday, Jan. 21, 2020. At right are Bret Chappell and Olivia Spencer.

At a time when the price of a bag of groceries is rising at near record rates, cutting the state’s personal and corporate income tax rate while keeping the state’s 1.75% sales tax on food is a terrible idea because it rewards Utah’s richest individuals and corporations while providing low and middle-income taxpayers with an insultingly small tax savings.

In addition, as Ronald Mortensen, co-founder of Citizens for Tax Fairness, points out, the corporate income tax reduction further socializes big business costs while privatizing profits.

For example, if the state income tax is lowered from 4.85% to 4.5%, a family with a taxable income of $25,000 would realize a savings of $87.50 while a family or corporation with a taxable income of $1 million would pay $3,500 less in income taxes. However, if we eliminate the sales tax on food, the family with a taxable income of $25,000 and who buys $300 of groceries a week would save $273 annually. That is $185.50 more than they would receive if the income tax were cut.

On the other hand, a millionaire family spending $300 a week on food would have an annual savings of $273 rather than a $3,500 income tax reduction and, even if it spent twice as much on food, it would still pay $3,041 more in income taxes than if the income tax were cut. And corporations would have an income tax savings of $0.

This largely, but not fully, explains why the Utah Taxpayers Association, Salt Lake Chamber and wealthy Utahns want income tax cuts and why they oppose eliminating the sales tax on food — big corporations and Utah’s richest individuals all realize a much greater tax savings when the income tax is cut. Yet another reason is that big businesses are largely exempt from almost $1 billion in sales taxes and government needs the food tax to help offset that loss of revenue.

You will recall that the Utah Taxpayers Association and Salt Lake Chamber were behind a tax reform package that was rushed through a special session of the Utah Legislature just before Christmas in 2019. That package re-imposed the full state sales tax on groceries — a 3.1% increase, created a new 4.85% state sales tax on gasoline and a new 7% sales tax on services.

The sales tax on food proved to be so unpopular that the referendum that I helped lead collected enough signatures, in record time, to put it to a vote of the people. Once that happened, the Legislature and governor couldn’t act quickly enough to repeal the grocery and other sales tax increases.

Now, I’d like to provide you some facts conveniently ignored by the Utah Taxpayers Association.

First, as shown above, any income tax cut overwhelmingly benefits wealthy Utahns and corporations. On the other hand, the elimination of the state sales tax on groceries benefits average Utah families more than an income tax cut does.

Second, some Utahns do not pay any income tax so they get no benefit from an income tax cut. Plus, the poor don’t have the money to hire accountants to help them apply for exemptions or credits on their taxes. The elimination of the sales tax on food benefits everyone without the need for Rube Goldberg grocery tax credits.

Third, I am deeply saddened when the president of the Utah Taxpayers Association opposes eliminating the sales tax on food because, as he writes in The Tribune, it is “the most stable source of tax revenue for government entities because those necessary items [food] are purchased no matter what economic circumstance we find ourselves in” and because it forces even the poorest among us to pay “the widow’s mite” even though the widow’s mite was voluntary.

This callous line of reasoning reminds me of Marie Antoinette who reportedly said “Let them eat cake,” when told that her French subjects had no bread.

Fourth, if the Utah Taxpayers Association really wants to expand the sales tax base, then let’s look at all the sales tax exemptions granted to big businesses and stop trying to pass a new $35 million per year sales tax exemption for the oil and gas industry.

Finally, I would note that Utah is only one of 13 states that taxes groceries. Our current sales tax on groceries adds to the inflation rate of food. For example, at 15% inflation, for every $100 of groceries that originally cost $101.75 after the sales tax is added, Utahns now pay an additional $15 due to inflation and an additional 26 cents of sales tax on that $15 for a total of $117.01. So, the state actually benefits in terms of tax revenue as inflation drives the cost of food up and this is despicable.

I call on the Utah Taxpayers Association, the Salt Lake Chamber and their members to support my bill that eliminates the sales tax on food. Rather than continuing to socialize their costs and shift their tax burden onto average Utahns, Utah’s biggest businesses and richest individuals need to show a little compassion for others.

(Chris Samuels | The Salt Lake Tribune) Judy Weeks Rohner at the Utah State Capitol, Dec. 23, 2019.

Judy Weeks Rohner, West Valley City, represents House District 30 in the Utah House of Representatives and was a sponsor of the 2019 tax referendum which forced the Legislature to rescind its re-imposition of the full sales tax on food.