Almost hidden among all the numbers and charts in the final Tax Reform Task Force meeting Monday night is this little nugget:
While any number of low-income advocates say this tax reform package — in the main — is regressive — that is, it harms poorer Utahns more than richer Utahns, in fact it may do just the opposite.
Legislative budget experts said Monday night that taken as a whole — the income tax cuts, the food tax refundable credit, the expanded income tax deductibility and so on, the proposed tax bill “is a tiny bit progressive, overall.”
This is a big deal, assuming the budget experts turn out to be right down the road when the real numbers of tax reform/collections come in 2020 and beyond.
In any case, the task force voted to approve the latest version of the bill, 6-3, and all indications point to GOP Gov. Gary Herbert calling a special session Dec. 12. Voting no were Sen. Karen Mayne, D-West Valley; Reps. Joel Briscoe, D-Salt Lake, and Tim Quinn, R-Heber.
It is expected to pass in the special session, perhaps with no Democratic votes in the House and Senate, and even with a few GOP legislators voting against it as well.
Most of the changes in the latest bill were reported by UtahPolicy.com over the weekend.
Rep. Robert Spendlove, R-Sandy, an economist, some of whose ideas are reflected in the latest $160 million tax cut bill, was working for the state in 2007 when Utah’s last major income tax overall took place — putting in a 5 percent flat income tax rate.
Spendlove said the 2007 tax reform gave a $220 million tax cut, with the average Utah family getting a $328 income tax cut annually.
The bill debated Monday night will give a $160 million tax cut, but with the average family of four getting nearly a $500 tax cut overall — more bang for the buck than in 2007. “We are doing even better this time,” he said, adding that the task force has met 18 times, across the state, with 63 hours of hearings.
“No bill” in the general session “ever gets so much time and public input.”
Clearly, GOP legislative leaders have gotten their public relations act together — Monday night several dozen groups testified they support the bill and specifically support a special session.
So many groups spoke in favor, even of a special session, that later in the meeting Guinn said “it seemed contrived” that so many would just appear, as they did. He also voted against the bill, saying little or nothing has been done to extend the sales tax to services, nor solved the problem of the underfunded General Fund.
During the public comment period, a number of critics of the bill also spoke — many of them testifying in previous public task force hearings.
One of those who urged lawmakers to act now is former Senate President John Valentine, who is now chairman of the State Tax Commission.
He said if lawmakers give the income tax rate cut (from 4.95 percent to 4.66 percent) this week, before the end of the year the commission will develop tax withholding tables, although individual businesses may not get those new tables reflected in employees’ paychecks until later in the spring.
While the overall tax cut will be $160 million, Utah individual income tax filers will see a $191 million tax cut, and tourists or visitors will pay $31 million more mainly through a gasoline tax hike and increased rental car taxes, so non-Utahns are looking to pay a share, as well.
Eighty-four percent of Utahns will see a tax cut, with 16 percent paying more. But even those who will pay more, on average, only $17 more annually, state budgeters said.
And even those 214,000 taxpayers who see a small tax hike under the reform, many are individual taxpayers with no dependents, and they got a healthy tax cut in the 2017 federal tax cuts.
Overall, with federal income tax benefits, they are still getting a combined tax cut.
Sen. Lincoln Fillmore, R-South Jordan, said he figures that while some argue the tax reform is regressive — giving rich Utahns more of a benefit than low-income — in fact a family of three, four or five members that make $30,000 to $40,000 a year will get about the same financial benefit as the same family making $150,000 a year.
That’s because the richer family can’t get the food tax rebate and other targeted benefits in the bill aimed at low-income Utahns.
Left undecided is the question of whether to amend the state Constitution to remove the current income tax earmark that says all of that tax must go to public and higher education. That debate will come in the general session, which starts Jan. 27.
The current bill would allow, legislative budgeters said, moving $350 million from income-tax revenue now going to colleges to be replaced by sales tax revenue — thus providing, at least for next year, more money for schools.
GOP legislative leaders are working with several pro-public education groups seeking some kind of “guarantee” spending in public school funding.
But it is clear that the Utah Education Association, the main teacher union, are not on board, its leaders once again testifying against the bill Monday night.