After uproar, then months of talk, state tax reform 2.0 has arrived at the Utah Capitol.
The state Tax Restructuring and Equalization Task Force released a 182-page draft bill that would tax more services, cut Utah’s income tax, and raise the sale tax on food.
“It’s still too much too soon,” said Krista Palmer, a businesswoman and leader of the Utah Tax Reform Coalition, a group sharply critical of imposing new service taxes. “This affects every major sector of the economy, in fact every portion of the economy...it’s a brand new tax on services. It’s enormous.”
The Legislature tried a massive tax rewrite last general session, but just days after it was released, and in the face of vocal opposition from small businesses, Governor Gary Herbert and legislative leaders abruptly hit the pause button.
In some quarters, a cooling-off period may not have dialed down big concerns.
“Right now this seems unfair, unjust, and not good for kids,” said Heidi Matthews, president of the Utah Education Association, who is against the proposed income tax cut.
“This is hundreds of millions of dollars that is being cut from the income tax, which is the fund constitutionally guaranteed to go to public education.”
Republican legislative leaders counter tax reform is needed in an economy where sales tax on goods is dropping as a percentage of state revenue. The income tax cut, which may be as much as .3%, might offset tax increases in the bill.
An analysis released on Thursday said a family of four, with household income of $60,000 a year, would see “an average total tax reduction of more than $320 per year.”
Parents of children would get much larger dependent exemptions — from $565 for each child to $2,500. But single people and married couples without kids could pay slightly more in taxes, even at lower income levels.
Low income families would get grocery tax credit to offset the higher sales tax on food — from less than 2% to nearly 5%.
New sales taxes would be imposed on landscaping, veterinary services, pet boarding, taxis and rides on Uber and Lyft, towing, parking, shipping, and streaming media.
There is much more, and a special legislative session could happen in just a few weeks.
2News' Bronagh Tumulty was at the meeting to find out specifically why singles or married people without children might end up paying more.
After federal tax reform in 2017, singles benefited the most, while tax exemptions were reduced from $3,038 dollars per dependent to just $565. The current proposal aims to somewhat level the playing field again by bumping that exemption back up to $2,500 per dependent.