The latest tax reform package coming from leaders of the Legislature’s Tax Reform Task Force has been made public, and there are only a few changes from a plan released several weeks ago, first reported by UtahPolicy.com.
The new plan, which will be debated at a task force meeting next Monday night, will see an overall income tax cut to Utahns of $80 million.
In addition, the income tax rate, now at 4.95 percent for all filers, will be moved to 4.64 percent.
Overall, individual state income taxpayers will see a $121 million tax cut -- not insignificant.
However, businesses would see a $41 million tax hike, and very likely would pass along their increased costs to individuals -- the difference being the $80 million figure.
The plan still contains some controversial measures, which were also in the previous plan put forward by the co-chairs of the task force: House Majority Leader Francis Gibson, R-Mapleton; and Sen. Lyle Hillyard, R-Logan:
-- The full state sales tax will be put back on unprepared food, going from 1.75 percent to 4.85 percent.
-- The current sales tax exemption on wholesale gasoline and diesel will be repealed. While the state sales tax will go back on wholesale fuel, it is likely the producers will pass that tax along to drivers at the pump, which could end hikes of about a 5 percent increase.
-- There is still income tax cuts to low-income Social Security recipients.
-- Feminine hygiene products will be exempt for sales tax.
-- And several dozen services, not taxed now, would have sales tax applied.
-- Besides the wholesale fuel sales tax exemption, there are other current sales tax exemptions that would be repealed.
-- There would be a refundable income tax credit to folks who make under $35,535 a year, $125 per person in the family to make up for the full sales tax on food. That would be a $500 credit for a family of four, and if a person or family doesn’t file a state return, they can file a one-page claim to get their check.
-- The personal income tax deduction for a dependent will go up from $565 to $2,500, which will mean less income tax owed for individuals and families.
The new proposal released Friday night is only a draft, and it can be amended by the task force before recommendations go to the Legislature.
Leaders still plan to have an early December special session, where the bill will be discussed, perhaps further changed, before being passed and signed into law by GOP Gov. Gary Herbert, who has been kept apprised of the recent developments.
Since there are multiple income tax changes, leaders want it in place before Jan. 1 -- the start of the income tax year.
Likely not yet ready for action -- but which will be discussed at Monday night’s task force -- is a separate measure that would amend the Utah Constitution to repeal the current earmark which says all income tax revenues can only go to higher and public education.
Other guarantees -- which could also be placed in the Constitution -- would keep education funding the larges part of the state budget, with student growth and inflation-adjustments coming in each annual budget.