By Russell Murdock
The state of Utah has a billion-dollar surplus burning a hole in its pocket and state legislators see this as their opportunity to push their agenda.
Several Republican lawmakers in light of this budget surplus are pushing for legislation that would lower state income tax rates. Parallel income tax reform bills are making their way through both the House and the Senate.
Sen. Curtis Bramble, R-Provo, is sponsoring the Senate version of the bill that offers the same income tax-cut as does the House version.
“It”s a flatter, simpler, income tax system. True tax reform,” Bramble said.
While Bramble”s bill is identical to the House bill in its effect on income tax, the bills differ in their approach to food sales tax. Bramble said he believes it would be economically unwise to remove sales tax on food, and that the real way to help the economy is through lowering the income tax rate.
“Ohio did something similar a few years ago [lowering the income tax rate],” Bramble said. “It helped stimulate economic development, leading to more, higher paying jobs. I believe this same economic development would occur in Utah.”
To achieve this economic development, the proposed tax reform would lower the state income tax rate for Utah residents from 7 percent to 4.9 percent.
Bramble said this tax reform would only affect those people who pay state income tax, or those making over approximately $20,000 annually meaning few students would be affected.
This is not the first income tax reform bill that has been proposed in the legislature this year. Earlier versions of a similar bill supported by Gov. Jon Huntsman would have cut taxes by $17 million to $23 million. But the drafters of the current bill, nicknamed “H3,” had loftier goals in mind for their tax break. Specifically, the bill would authorize tax cuts of $40 million to $60 million.
“We decided to go a little bigger,” Rep. John Dougall, the House sponsor of the bill, told The Associated Press.
While both sponsors of the bill appear confident this income tax reduction is the best thing to do for the residents of Utah, not everyone is so sure.
Robert Goss, visiting instructor of political science, said the legislature is currently struggling to decide if tax cuts are really the best use of the budget surplus. Goss said the legislature is comparing the benefits that would come from putting the money in education to the benefits of passing these large-scale tax cuts. Also, Goss raised the concern that these income tax reductions won”t help those of certain income levels.
“People who are less well-off spend a higher percentage of their income on food, so a sales tax cut on food would benefit them more [than an income tax-cut],” Goss said.
Despite the debate and his concerns, Goss said he is confident some tax cuts will be passed.
“I think we are going to see some reform in both income and sales tax,” he said. “And that is a milestone for this state.”
