Utah legislators finally brought forth a bill to produce the most fundamental change in tax structure in more than a decade. At 257 pages, the complicated and far-reaching legislation touches the wallets of virtually all Utahns.
And those Utahns apparently get two weeks max to look it over before it becomes law.
The need for this legislation has been building for years. Sales tax collections have not kept pace with the economy as spending has shifted from goods to services.
We aren’t at any precipice, and this is exactly the kind of situation that would benefit from a long and deliberative public process. Yet, legislators still don’t want to be second-guessed, and that is a continuation of their recent theme:
“Thanks, Utahns, but we got this.”
As with the overhaul of two citizen initiatives that won at the ballot box, the Legislature is still looking askance at the public’s role. That’s too bad, because in this case it’s pretty good work they have to show the public. No plan is perfect, but this one can hold up to a lot of scrutiny.
House Bill 441 reflects a lot of outreach on the part of legislators. They have made an honest and credible effort to spread the pain.
Utah would become one of a growing number of states to have real estate transfer tax. This is basically a sales tax on real estate sales, but at a far lower rate than regular sales tax (less than a 10th of a percent). For a political body that has traditionally protected real estate interests, this is a big step.
A sales tax on water makes sense. It fits with the desire to put more of water costs on water users rather than general property tax obligations, creating more incentive for residents to conserve.
A tax on vehicle trade-ins is one of the single biggest sources of new tax money. In theory, this tax is paid by whoever receives the vehicle, usually a car dealer. But no doubt the dealers will recover that cost by setting trade-in values lower. In other words, everyone’s trade-in value will take a hit. But, to the extent that those with higher incomes tend to trade in higher-value cars than those with lower incomes, this tax is progressive.
As currently written, those new taxes are offset by an overall drop in the sales tax rate. It’s intended to be revenue neutral, which is important given the demand for public resources in our fast growing state.
Legislators should preserve that, but there is every indication they won’t. They’re talking big tax cuts, and that makes certain that little progress will be made in adequately funding our schools. We’ll still be at the bottom.
HB441 is a credible start on a tough problem, and lawmakers deserve credit for spreading the pain.
But the public — both citizens and businesses — deserve more time with it. There are too many possibilities for unintended consequences. Give the rest of us more than a two-week shot, or we might have to start more petitions.