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SALT LAKE CITY — Lawmakers showed new interest Wednesday in tackling what for many Utahns may be a significant increase in their state income taxes as a result of the $1.5 trillion federal tax cut package.
Members of the Legislature's Revenue and Taxation Interim Committee were told Utahns with large families will still owe as much as an additional $1,231 on their 2018 income after a $30 million tax break and a rate cut from 5 percent to 4.95 percent.
It's going to take another $153 million to fully restore the deduction for dependents that was eliminated in the tax changes made by Congress in December 2017, legislative economist Thomas Young said.
That's because the tax break passed by lawmakers in a special session last July only amounted to adding back $565 of what would need to be a $3,113 deduction to totally offset the impact of the federal changes, Young said.
Those numbers, as well as calculations presented by a tax preparer who showed an example of a family with four children seeing their state tax bill jump $549 from the previous year to nearly $4,500, seemed to surprise some on the committee.
"Even with the softening of this blow that we did during the special session, there's a signficant difference," said the committee's co-chairman, Sen. Howard Stephenson, R-Draper. "We thought we had mitigated a lot of that."
Sen. Curt Bramble, R-Provo, a certified public accountant, said he understands why the special session legislation "didn't hit the mark. I understand why it didn't go far enough. Because we were trying to put a Band-Aid on it."
Bramble said lawmakers need to look closer at the issue and "make certain we get it right."
The child tax credit passed in July, expected to cut state income taxes by about $34 for each dependent, or about $170 for a family with five children, wasn't finalized until just before the start of the afternoon special session.
The legislation was put together so quickly it came as a surprise then to Rep. Tim Quinn, R-Heber City, the sponsor of a similar bill offering a bigger deduction that failed to get a hearing during the 2018 Legislature.
Quinn, a member of the interim committee, said he was appreciative of the tax break passed in July, but it was clear then it fell short. He said it would be "disingenuous if we act like this is a revelation."
He said lawmakers "hellbent" on reducing the state income tax rate during the general session argued that Utahns could pay more to the state because they'd see their federal taxes cut, something that's turning out not to be true for everyone.
"Yogi Berra once famously said, 'This sounds like deja vu all over again.' I'm wondering where all these voices were in our session," Quinn said. "We shouldn't be shocked. None of this is new."
No action was taken by the committee Wednesday, but Quinn told a reporter later that he's now hopeful the Legislature will be willing to take up the issue when the new session begins in late January.
"It sounds like there's an appetite for that," he said. But Quinn said restoring all of the deduction amount "is a big nut to chew right now," so lawmakers may target Utahns earning no more than around $100,000.
"I think we can fix that problem with another, about $60 million. I think that's much more palatable," he said. "Hopefully, this conversation will fuel an attempt in this session to provide all the relief we need to provide for those working families."
