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SALT LAKE CITY — GOP legislative leaders wouldn’t commit Wednesday to backing a new bill giving Utah families the same type of break on their state income taxes they would have gotten under the now-repealed tax reform package.
“I personally think that’s something we need to continue to look at,” House Speaker Brad Wilson, R-Kaysville, said, but declined to say when that would happen. Legislative leaders have made it clear they want to wait until the 2021 Legislature to take another try at tax reform.
“We are committed to, at least I’m personally committed to a tax cut, but we also don’t want to jeopardize our ability in the future to deal with the structural imbalance, so we’re still looking at ways to do both. And whether or not that happens this session, time will tell,” the speaker said.
Senate President Stuart Adams, R-Layton, offered a similar prognosis for HB260, a bill that restores the full state income tax dependent exemption for families earning up to around $90,000 before a “fairly steep” phaseout, to offset what amounted to a tax increase for many because of the impact of federal tax changes in 2017.
“When you talk about tax cuts, you have to look at stability, too,” Adams said. “You wouldn’t go spend all your savings if that was your income stream. So part of the security of giving a tax cut (in the tax reform package) was knowing we had a stable revenue stream. So that factors into it.”
At the start of the 2020 Legislature last week, lawmakers repealed the tax reform package that dealt with the state’s lagging growth in sales tax revenues by raising sales taxes on food, gas and some services while lowering income tax rates and giving breaks to families as well as low-income and elderly Utahns.
The repeal came as a citizens referendum appeared headed for the November ballot, giving voters the ability to retain or repeal the tax reform plan themselves. Some $80 million set aside last year for a tax cut as part of tax reform remains available.
Related:
After tax reform repeal, some lawmakers hoping to revive tax break for families
Even though the Republican leaders of the Utah Legislature want to take a time out on tax reform this session following the hasty repeal of the sweeping package targeted by a citizens referendum, there’s a push to go forward with a tax break for families.The tax break bill for families was released Wednesday but is awaiting a price tag before it can be introduced in the House. The bill’s sponsor, Rep. Tim Quinn, R-Heber City, said he’d been told the cost of the tax break would be about $50 million to $55 million.
Despite the admonition by legislative leadership about waiting until next session to tackle tax reform, Quinn said fellow representatives who’ve approached him about the tax break have told him that “there’s no way we can’t pass it” this session.
“I’d be really disappointed that in three years of attempting to give back what we should have never taken, we still don’t do that. This should not be part of leverage for some future tax reform. It’s not our money,” said Quinn, who served on the Legislature’s tax reform task force and voted against the tax reform package.
“I’m just hearing this needs to be taken care of. It’s time,” he said. “We waited too long.”
The speaker said the federal tax cut that eliminated personal exemptions provided “revenue that the state saw was of no result of any action we took. And so how we address that I think will be important and whether we do exactly what we did in December ... it’s hard to tell.”
Wilson said he believes “a lot of our members in both the House and the Senate feel like that’s something they’d like to address at some point.” Republicans hold supermajorities in both chambers, and this is an election year for all House members and half of the Senate.
Asked about whether it would be difficult to hold onto the $80 million set aside for a tax cut in an election year, Adams said he hopes “it’s never hard” to take the time needed to come up with a solution to the state’s budget imbalance.
Wilson held a town hall in Layton Monday night, and he reported that a constituent stood up and said: “We’d really like a tax cut and we’d like it sooner rather than later.”
Wilson said he agreed, but then another person one seat down stood up right after him and said, “Do not cut our taxes, invest all that money in education.”
“This is the world we live in,” the speaker said. “So we will take all that information and make the best decisions we can.”
Senate Majority Leader Evan Vickers, R-Cedar City, said there’s been some discussion about Quinn’s bill, as well as those giving tax breaks to Utahns who receive Social Security or military pension benefits.
“Here’s the caution. In the tax reform bill ... there was a backstop, so that anything that was done on the income tax side was going to be replaced,” Vickers said. Under the Utah Constitution, income taxes can only be used for education while much of the rest of the state budget is funded through sales taxes.
“That would be a direct cut to education,” Vickers said. “We’ll have to look at those. If we decide to do some of those, we just have to be cautious and understand that, that is the ramification.”
Rep. Walt Brooks, R-St. George, is the sponsor of HB81, a bill he said is intended to ensure Utahns earning less than around $50,000 annually don’t have to pay income taxes on their Social Security benefits. The bill, which has been introduced but not yet assigned to a committee to be heard, has a $15 million fiscal note.
Brooks, who said his goal is to eventually exempt all Social Security benefits from being taxed by the state, described the reaction to his bill as “favorable because it’s not a humongous cost right now. It’s not covering the whole thing, but it’s getting the ball rolling in the right direction.”
He said he understands that legislative leaders want to consider both tax increases and cuts at the same time.
“I think the holistic thing is a good idea,” Brooks said. “But, like I’ve said, I think this piece is enough where it could stand on its own. We’ll have to see where it goes.”
In the Senate, SB86, sponsored by Sen. Curt Bramble, R-Provo, would give retired military personnel a tax credit equal to their retirement pay. That’s expected to reduce the average tax burden of more than 15,700 military retirees by $1,304, according to the bill’s fiscal note, adding up to $20.6 million annually.
