What do Utahns want from tax reform? A smaller tax burden and guaranteed money for education

Utah Capitol 31

Utah lawmakers touted the tax reform bill passed last week as delivering one of the largest tax cuts in the history of Utah. That part of the bill is exactly what Utah voters wanted from the tax overhaul effort according to a new Utah Political Trends poll. But, in other areas, lawmakers fell short of expectations.

The survey from UtahPolicy.com and Y2 Analytics asked Utah voters which values were most and least important to them as lawmakers finished their months-long work on the tax reform bill.

Voters told us the top value they wanted lawmakers to consider during their deliberations was not to increase the overall tax burden on average Utahns. Lawmakers did deliver a tax cut of over $600 million according to legislative leaders, but sales taxes will increase by approximately $475 million, which includes reinstating the sales tax on groceries, which is an overall reduction of $160 million.

Legislative leaders say a primary reason the tax overhaul is necessary because they would like to have more flexibility in setting the state’s budget. Right now, there are two funds lawmakers use to fund the state. The education fund is fueled by personal and corporate income taxes and can only be used for public and higher education. The general fund pulls in all other sources of revenue and pays for everything else. Utah has been running surpluses in the hundreds of millions of dollars in recent years, but the extra money is from income taxes due to a booming economy. At the same time, revenue to the general fund has been atrophying in recent years, leaving areas like transportation and corrections wanting. 

Granting lawmakers more flexibility in budgeting came in dead last in importance in our survey, suggesting that the public doesn’t buy that rationalization for undertaking the tax reform effort.

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Utahns also told us it was very important to them that the new tax structure should not increase the tax burden on the poor. Low-income advocates and several legislators panned the aforementioned sales tax on food, saying it would hurt poorer Utahns who are already struggling to make ends meet by making food more expensive. To counter that, lawmakers included a refundable tax credit for low-income Utahns to help offset the increased cost.

Voters also said it was important to them that the new tax structure guarantees a certain amount of money goes to education. That part of the equation was left incomplete last week as legislators did not tackle the issue of education funding. There will likely be an effort during the 2020 session beginning in January to remove the constitutional earmark mandating all revenues from income tax go toward public and higher education. Legislators would like to shift the burden for school funding more toward local entities through property tax increases while making sure the state fully funds annual growth in schools.

Democrats proposed an alternative tax reform proposal that implemented a progressive income tax that would make wealthier Utahns pay a higher income tax rate. That idea was not highly rated among the six values offered to respondents in our poll who said they did not believe the new tax structure should tax richer Utahns at a higher rate than other citizens in the state.

Utah leaders, including Gov. Gary Herbert, often tout how friendly Utah is toward business. The state often is at or near the top of annual lists of states that have the most “business-friendly” environments, which usually means low corporate taxes and a looser regulatory structure. That goal doesn’t seem very important to Utah voters at all, coming in near the bottom of the list of values in terms of importance.

The survey was conducted from November 19 to December 7, 2019, among 911 registered Utah voters with a margin of error of 3.4 percentage points.