Utah’s tax reform task force not done yet as more questions raised

Utah’s tax reform task force not done yet as more questions raised

(Kristin Murphy, KSL)


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SALT LAKE CITY — Hours into what was supposed to be the last meeting of the Legislature’s tax reform task force, members voted to allow work to continue behind the scenes on changes that could boost the overall tax cut from the currently proposed $80 million to as much as $124 million.

The decision came after the Tax Restructuring and Equalization Task Force spent more than an hour-and-a-half listening to concerns about a previous proposal released Friday that continues to lower income taxes while increasing sales and other taxes.

Members saw a presentation that was not available online with other meeting materials showing the effects of changes to the size of the tax cut depending on the income level a dependent exemption increased from $565 to $2,500 and when a new $125 grocery tax credit would be phased out.

Sen. Lyle Hillyard, R-Logan, the task force’s Senate co-chairman, said he was unaware that nearly 30% of Utah taxpayers would see an increase under the proposal released Friday. Other options shown to the task force Monday dropped that number as low as 12%, in part by giving joint filers with no dependents an exemption.

“That’s the question, how much we want to reduce that 30%,” Hillyard said.

The committee is now set to meet again Dec. 9, the same week that has been discussed for a special legislative session. The 2020 Legislature does not begin meeting until late January and GOP leaders have said they want an income tax cut in place by the start of the new year.

“We’ll see where we’re at,” House Majority Leader Francis Gibson, R-Mapleton, told reporters when asked about what the additional meeting means for a special session. Gibson said there may be other changes made to the bill after task force members suggested some language is too vague.

Both Sen. Curt Bramble, R-Provo, and Keith Prescott, one of three non-elected tax experts on the task force, said there could be unintended consequences as a result.

“I’m starting to get the impression we haven’t looked at that very much at all,” Prescott said, calling for a much deeper look at the data and more modeling of the potential impacts of the sweeping overhaul. “We haven’t dug into the details. …I think Utah deserves better than this.”

The line of people at the standing-room only meeting that filled two overflow rooms at the Capitol who wanted to testify spilled out into the hallway.

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“I know you want to cut taxes. You want to be the best, biggest tax-cutters in history,” George Chapman, who describes himself as a Salt Lake City advocate, said at the start of the public comments. “But the idea of cutting taxes by raising taxes does not make sense.”

Others also questioned the tax increases in the proposal, which include restoring the full 4.85% state sales tax on food, now taxed at 1.75%, and imposing sales tax on wholesale gas prices as well as adding sales tax to an increasing small number of services.

“We don’t have a revenue problem. We have an allocation problem,” said Brett Hastings of Utah Legislative Watch, a citizens group formed in response to the 2019 Legislature’s failed attempt to extend sales taxes to a long list of services as a way to shore up revenues that are lagging as consumer spending shifts away from goods.

Hastings said a fix should mean shifting, not raising taxes, and warned that if a few services — such as pet boarding, storage facilities, towing, Uber and similar transportation, video streaming, parking lots, online dating and security monitoring — are taxed now, eventually that would be expanded.

But Rep. Tim Quinn, R-Heber City, the sponsor of last session’s failed tax reform bill focused on services, said he believes consumption tax is the best way to go because that type of tax is “the only one we have a choice whether we’re going to pay it or not.”

Audience members, many in Red for Ed shirts, raise their hands in support of a public commenter during a Tax Restructuring and Equalization Task Force meeting in the House Building on the state Capitol campus in Salt Lake City on Monday, Nov. 25, 2019. (Photo: Kristin Murphy, KSL)
Audience members, many in Red for Ed shirts, raise their hands in support of a public commenter during a Tax Restructuring and Equalization Task Force meeting in the House Building on the state Capitol campus in Salt Lake City on Monday, Nov. 25, 2019. (Photo: Kristin Murphy, KSL)

Steve Hiatt of Salt Lake City said he suspected the supporters of the proposal had never been poor and don’t “understand how brutal it can be.” Offsets in the proposal, such as a $125 per-person grocery tax credit for low- and middle-income Utahns is money they don’t have to “lend” to the state, he said.

A trio of speakers dressed in costumes from the Grinch, including Greg Zenger, who wore a green fur suit and carried a bag marked “tax” and told the task force, “the tax bag is already full.” Zenger said he hoped members would have “a change of heart like he did” and give some of the money back.

Teachers once again filled many of the seats in the hearing room as well as those in the overflow rooms, wearing red for education. Over and over again, they waved their arms silently in the air to indicate support for comments made about the need to fund schools.

Heidi Matthews, president of the Utah Education Association, told the task force they braved the snowstorm because income taxes, which under the Utah Constitution must be spent on schools, are being cut. “This absence of investment in our kids is what’s wrong,” she said.

Amending the Utah Constitution to remove the earmark on income taxes for education is part of the tax reform agenda, but, like a separate proposal aimed at identifying additional funds for schools, will wait until the 2020 Legislature.

Task force members heard a brief presentation from Senate Majority Assistant Whip Ann Millner, R-Ogden, on the school funding proposal that focuses on making it easier for local school districts to raise property taxes while the state would provide funds for enrollment growth and inflation.

Correction: An earlier version misspelled Senate Majority Assistant Whip Ann Millner’s last name as Milner.

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