As Utah lawmakers moved Tuesday to officially repeal the huge tax reform package, talk was surfacing about what to do with the $160 million that would have come in state income tax cuts if the reform had held.
And one idea put forward by Rep. Tim Quinn, R-Heber — the author of the original 2019 tax reform that was significantly altered by last summer’s Tax Reform Task Force — is to “restore” the child exemption basically taken away by the Trump tax cuts of several year ago.
“If it was up to this body,” Quinn told UtahPolicy.com Tuesday morning, pointing out to the majority side of the House Chamber, “it would pass, no doubt.”
GOP leaders in both the House and Senate told UtahPolicy.com that they have not discussed what to do with any tax cuts yet, although those discussions will likely come later in the 45-day general session, which started Monday.
Quinn’s idea, which he has floated in the past two sessions, is to give the full credit up to those who earn between $85,000-$95,000 a year — or about $70,000 for AGI (adjusted gross income).
After that level, the exemption would phase out quickly, he added.
But that would give to state income taxpayers an $80 million-to-$85 million income tax cut overall.
“It was never (Utah government’s) money in the first place. It is the taxpayers’ money.”
Utah just got it via the federal tax cuts.
Quinn says he first suggested the cut two years ago. And in a 2018 summer special session, lawmakers gave $30 million in tax relief on this exemption.
“That’s all the money we had then,” he said with a knowing smile.
But now there is $160 million in ongoing taxes available because of the tax reform repeal.
Not to mention another $482 million in ongoing tax revenue growth that lawmakers have available for spending, savings, or tax cuts this session.
This would be a full restoration of the exemption up to that AGI number, Quinn said.
The restoration was part of a bill Quinn wanted to run in the 2018 general session but was killed by some influential lawmakers. It never got out of the House Rules Committee, he said.
Then it was part of Quinn’s controversial, overall sales tax reform HB441 in the 2019 session. That bill was very different from the tax reform package adopted in a special session in early December, and which GOP Gov. Gary Herbert and Republican legislative leaders agreed to repeal facing a likely-successful citizen repeal referendum signature-gathering effort this month.
“As a stand-alone measure” in the just-started 2020 session, Quinn said he believes it would pass since the idea has had real support from legislators previously.
HB441 was an attempt to extend the state sales tax base to more services, from attorneys’ fees to haircuts to online streaming.
And then the sales tax rate of 4.85 percent would be reduced accordingly so there would be no net tax take.
But Quinn’s effort failed as time ran out in last year’s session, and all kinds of special interests rose up against him.
And a Tax Reform Task Force — Quinn was a member — held hearings throughout the state and drafted the tax reform package that, instead of including many, many services, put the full sales tax back on grocery store food and raised the gas tax slightly.
Quinn actually voted AGAINST the tax force’s recommendation and the bill in December.
He said the whole failed reform effort has deeply soured him, as he got dozens of nasty emails and comments for folks who blamed him for it — because he publicly pushed HB441 last session — even though he opposed the ultimate reform bill.
When he explains to critics that the repealed tax package was not what he originally envisioned and that he voted against it in the task force and final passage, they seem mollified.
Some lawmakers “had to relearn” the message that Utahns don’t want the sales tax put back on unprepared food.
UtahPolicy.com polling with Y2 Analytics consistently showed that around two-thirds of citizens opposed putting the sales tax back on food and the tax reform passed in December.
It was a harsh lesson, and GOP legislators and Herbert have suffered any number of condemnations since.