A new summary crib sheet on the proposed tax overall bill, to be considered Monday night in the last (it is hoped) Tax Reform Task Force meeting, has a few new numbers in it, but no great surprises from a previous version.
While it is difficult to provide what the “average” Utah family will see in tax reform/tax cut, GOP legislative sources said Friday night each family should see between $200 to $300 more in their pockets at the end of 2020, and each year after that.
UtahPolicy.com went through the summary issued Nov. 25 and the reworked version for Monday. Here are some differences:
The largest, of course, is the already-reported increase in the overall tax cut -- going from $80 million to $160 million. That can be afforded because of new revenue estimates released Friday that show around $680 million in ongoing and one-time revenue growth/surpluses for next fiscal year.
Assuming the $160 million tax reform package is passed in a Dec. 12 special legislative session, then that $680 million number will drop to around $520 million when the general session starts Jan. 27.
Still, that’s a new half a billion dollars more for legislators to divvy up between the current fiscal year and fiscal 2020-21, which begins July 1.
The expanded personal income tax deduction (usually taken for children) goes from an estimated $95 million tax cut to $132 million in the new proposed bill.
GOP sources tell UtahPolicy.com that number was increased by updated estimates by the Utah Tax Commission. (A nice Christmas gift to citizens.)
When the full sales tax on unprepared food is restored (one of the more controversial measures in this tax reform effort), lawmakers will give a $125-per-person refundable to low-income Utahns. That tops out at $500 for a qualified family of four -- with a check coming to the family each April if they file a short form.
That tax cut, overall, goes from $125 million to $135 million in the new Monday bill. That’s because, sources said, the poverty level is raised from 138 percent of poverty to qualify to 175 percent to qualify. That means the top phase out annual income goes up to around $78,000 a year -- anyone making more than that can’t get the refund.
A reworked sales tax exemption cut goes from $1.5 million to $5 million. Still included in the new tax exemptions are products dealing with female menstruation, an exemption requested by Democrats.
The motor fuels tax exemption repeal goes from a $205 million tax hike down to $170 million.
Sources said the original idea of imposing a 10-cents-per-gallon tax increase on diesel fuel is modified; it will be 6 cents next year, 6 cents the year after, and then go to 10 cents per gallon in year-three -- giving large-scale diesel purchasers, like truck fleets, more time to adjust to the increase.
A previous $30 million overall hike in expanding the sales tax to more services now goes to $43 million.
Nothing is changed except the number. GOP sources said the Tax Commission always thought the changes would bring in $47 million more, while the Legislature’s budget office believed it was around $30 million. So the updated fiscal note just moves the estimates up a bit, showing the new $43 million number.
Overall, the personal and corporate income tax rate will drop from 4.95 percent to 4.66 percent.
Only between 14 percent and 16 percent of income individual income tax filers will see some kind of overall tax hike if the proposed bill passes, sources said.
And among those, by far most are individuals filing separately. That group got an oversized federal income tax cut by President Donald Trump and the former GOP-controlled Congress, which took effect in 2017.
Even when Utah legislators acted to reduce the new state tax windfall because of that federal tax reform, single filers still came out way ahead, GOP sources said.
On average, that group may see an overall tax hike of around $140 a year in this new state tax reform, sources said. That comes out to about $12 a month, or 50 cents a day.
Considering the tax benefits they got in the 2017 federal tax reform, they are still ahead, the Republican legislators told UtahPolicy.com
Finally, overall individuals will see a $188 million tax cut. Businesses will see a $28 million tax increase (way down from the estimated $77 million tax increase seen in the previous version of the bill.)
Since it is likely business will pass along most of that new $28 million tax liability to consumers, overall we see the new $160 million tax cut if the bill is passed by the Task Force on Monday night, GOP Gov. Gary Herbert (who likes the new proposed bill) calls a Dec. 12 special session, and the Republican majority in the Utah House and Senate pass the measure.
All the work is not done, however. There could even be some “tweaks” in the upcoming general session, although leaders would hope that, at least for now, tax reform is done for 2020, an election year all around.