Utah 2019 Tax Referendum: The Winners and Losers

Ronald Mortensen, Ph.D.

Co-Founder, CitizensForTaxFairness.org

1-25-20

WINNERS

We the People who exercised our right to veto a legislative action that vast majority of Utahns understood to be ill conceived and to do more harm than good.  

Thousands of citizen volunteers who came together through social media, donated money to pay for the printing of referendum packets, put political and other differences aside, stood side-by-side for hours witnessing signatures and gave up their holidays in order to gather over 180,000 signatures in record time.  

Civility and mutual respect was given a huge boost by the referendum which brought Utahns across the political spectrum together in a common cause. By working together, Utahns learned that there is much more that unites us than divides us. 

This is just a sample of the Winners and Losers. For the entire list, click here.

LaVarr Webb and UtahPolicy.com have a “deplorable” moment

LaVarr Webb, the publisher of UtahPolicy.com, had a “deplorable” moment when he accused a broad cross-section of Utahns of joining the “fringe groups” that are attempting to repeal the Herbert administration’s and Utah legislature’s tax reform package. If those collecting signatures succeed, Webb can only thank himself for motivating the “fringes” to overcome seemingly insurmountable odds. Click here to read the entire article.

Do Utah’s real estate professionals really support food, gasoline and property tax increases? Why don’t you ask them?

The Utah Association of Realtors (Realtors) provided key support for Utah’s so-called tax reform legislation that was passed during a special session of the legislature just days before Christmas. This column provides background on Realtor activities and concludes with a series of questions for real estate professionals. Click here to read the entire article.

1. Why isn’t the effective date of for the income tax cut December 31, 2019 so the new 4.66% rate applies to 2019 income returns? Why should Utahn’s pay sharply higher income taxes again in 2019 after already being hit hard in 2018?

2. Since the proposed bill doesn’t affect 2019 income tax payments, is it really necessary to pass it in a special session? Or is this being done to generate additional general fund revenue by taxing food and gas as early as possible in 2020?

3. Since you didn’t restore the dependent exemption in 2018 like Idaho did, some Utah families will have paid in excess of $2,000 in additional income taxes by the time the proposed tax cut takes effect. How many years will it take for those families to recover $2,000 under this proposed tax reduction? Is this a tax cut or is it simply returning some of their own money to them? Why didn't you take care of the exemption issue in 2018 when Representative Quinn tried to get you to do it?

4. Why do most Social Security recipients continue to pay taxes on their Social Security benefits under this bill? Is it because you agree with a member of the task force who said that individuals with investment income—such as IRAs—don’t need their Social Security and can afford to pay state income tax on it?

5. Why are you requiring elderly widows and widowers to pay higher taxes under this bill—single filers pay more?

6. Were remote sales tax collections included in the calculations used to determine the overall tax savings that individuals will realize if this bill is passed?  If not, doesn’t that reduce the amount of the tax cut from $160 million to a significantly lower number?

7. Why aren’t you including the impact of Senator Millner’s planned automatic property tax increases in the analysis of this tax reform’s impact? Automatic property tax increases will more than offset the tax cuts in this bill in just several years while destroying the truth-in-taxation process.

8. Why are you increasing the state’s gas tax by roughly 40% (10 – 15 cents per gallon based on price) when just a year ago, your constituents voted 65% to 35% against a 33% per gallon increase? And why are you imposing the gas sales tax all at once when you phase in the flat rate 10 cent per gallon diesel tax increase over three years? Is this because you treat businesses with high paid lobbyists better than the average citizen? Finally, why do rural legislators support this gas tax increase given the long distances their constituents have to drive?

9. Why aren’t you repealing any of the half-billion dollars in sales tax exemptions granted to big businesses? Doesn’t this loss in sales tax revenue have to be made up for by requiring low and middle income Utahns to pay sales taxes on food and gasoline?

10. Why are you increasing the sales tax on food and gasoline at the same time Republican members on the Public Utilities Interim Committee passed a bill that removes the sales tax from oil and gas extraction operations, electrical generation and transmission facilities and pipelines with a loss of $48 million in state sales tax revenue per year when fully implemented?

11. Why are you only adding the sales tax to shipping and handling on taxable sales? Is this because big businesses purchase items sales tax free and won’t pay this tax?

12. If the state needs sales tax revenue so badly, why don’t the governor and legislators set the example and pay sales taxes on their campaign contributions?

13. Why wasn’t any consideration given to controlling state spending which has increased by 146% during the past 20 years while median household income only increased by 67%? Is there anything in this bill that will even slightly slow the growth of state spending?

14. Why are you adding a sales tax to identity theft protection? This protection is required because the state facilitates identity theft by selling, sharing and allowing data breaches that compromise its citizens’ personal identifying information.

15. Why were $150,000 of taxpayer funds used to create a propaganda campaign designed to gain support for tax reform in apparent violation of state procurement laws and without a specific appropriation of funds?

16. Do you agree with the member of the task force who said, in effect, that citizens are a “reservoir of funds” for government to tap?

17. Do you agree with the task force member who said that higher property taxes increase property values?

RESPONSE TO REPRESENTATIVE STEVE HANDY WHO SAYS HOW WONDERFUL THE TAX REFORM PROPOSAL IS.

You must be reading a different bill than I am. The one I am looking at imposes a 4.85% sales tax on gasoline (10 cents a gallon at today’s prices) despite a 65% to 35% vote by the public against a 10 cent per gallon increase in 2018. That is on top of annual gas tax increases based on the three year rolling average.  (The gas tax is already scheduled to go from 30 cents per gallon to 31.1 cents on 1/1/2020.)  With the sales tax added, that will make it 41.1 cents and as gas prices go up there will be two automatic increases – the rolling average and the amount paid in sales tax.

The gas tax hits low income individuals the hardest since they tend to drive older, gas guzzlers and generally have longer commutes than do the more well to do with their new, fuel efficient vehicles.

The bill continues the massive sales tax exemptions given to big businesses that employ powerful lobbyist. When these goods are sold out of state Utah collects zero sales tax and no corporate income tax on them so the rest of us have to make this up. Why is the state socializing business costs while privatizing profits?

The average single individual and or couple actually sees a small tax increase—not a tax reduction according to information presented to the Task Force.  Singles and couples tend to be those least likely to be able to afford this – young people just starting out or seniors on fixed incomes.  The average couple has to make $163,000 before they see a tax reduction.

The bill discriminates against blue collar workers.  The professions continue to be exempt from sales taxes on services (lawyers, financial advisors, medical professionals, etc.). On the other hand, house painters, landscapers, cleaning services, plumbers, electricians, HVAC technicians, car washes including interior cleaning, etc. all will have to add sales taxes to their bills. The proposed legislation even taxes shipping and handling on taxable sales. And while the state is collecting $1,050 by selling voters personal information which facilitates identity theft, the bill imposes a sales tax on identity theft protection services so the state makes money coming and going.

And that’s just the tip of the iceberg.

Here's an idea, how about putting a sales tax on campaign contributions?  Had the campaign contributions of just those on the Task Force been taxed over the years that would have brought in $150,000 in sales tax revenue.

Or why not legalize and tax online gambling since that is a $300 billion per year business and Utahns are already betting on sports?  Or why not implement the Powerball and Megamillion dollar lotteries like Idaho and Wyoming do?

https://le.utah.gov/Interim/2019/pdf/00004761.pdf

TAX RESTRUCTURING AND EQUALIZATION TASK FORCE TARGETS THE WEAKEST

It is important to remember that the Tax Restructuring and Equalization Task Force has members from both houses of the legislature and the Governor’s office. Nothing is done unless it is approved by the Herbert/Cox administration.

Based on the November 7 meeting of the Task Force, it appears that Utah’s legislative and executive branches are acting like a pack of coyotes stalking a herd of sheep. Like the coyotes they are going after the weakest members of the herd first—the young, the old, the tired—while leaving the strong ones alone.

That is why the current bill requires small businesses and blue collar workers—house painters, landscapers, cleaning services, plumbers, electricians, HVAC technicians, car washes including interior cleaning, etc—to collect sales taxes on their services. After all, these folks are so busy trying to keep their heads above water that they don’t have the strength to fight off the legislative and gubernatorial coyotes

The bill also goes after the poor, the young and the elderly by stacking more sales taxes on the things they buy including food and gasoline. The average single individual or couple actually sees a small tax increase according to information presented to the Task Force. In fact, the average elderly couple has to make $163,000 before they get a tax reduction.

The legislative and gubernatorial coyotes have left the strong corporate capitalists, the rich, and the white collar professionals who have high powered lobbyists and who provide politicians with millions of dollars in campaign contributions alone because they are too strong to attack. In fact, they allow them to maintain their hundreds of millions of dollars of tax exemptions and fix it so they benefit most from corporate and individual income tax cuts.

It looks like a lot of Utahns need some sheep dogs to protect them.

Voters say no to 33% gas tax increase. Tax Task Force says tough—you’re going to pay it.

Ronald Mortensen, Ph.D, Co-Founder CitizensForTaxFairness.org

On November 6, 2018, Utah voters resoundingly said No! when asked if they would support a 10 cent per gallon increase in the gas tax—65% No (689,254 votes), 35% Yes (363,878 votes).  So, what does the Tax Restructuring and Equalization Task Force do? They ignore the vote of the citizens and include a “temporary” 4.85% state sales tax on a gallon of gasoline in their tax reform proposal.

Continue reading by clicking here.

Heard at the Tax Restructuring and Equalization Task Force meeting on October 22, 2019:

TASK FORCE MEMBERS:

Those paying income taxes are a “reservoir of funds that is available to us.” The tax rate can be adjusted [to tap the reservoir] based on the state’s needs for revenue.

The property tax is a “benefit tax.” It adds value to the landowner’s property.

Infrastructure such as roads and highways should be funded by property taxes but water infrastructure should be funded by user fees.

People can be land rich and cash poor. These people shouldn’t be forced to sell their property in order to pay the taxes. If people are land rich and cash poor they need to develop their property. If they don’t develop it, they should sell it. 

PUBLIC COMMENTS

“I didn’t hear anyone on this committee address cutting state spending or even slowing the growth of state spending.”  (Ron Mortensen)

I am a taxpayer and object to being considered a reservoir of funds available to the state.  (Ron Mortensen)

How about imposing a sales tax on campaign contributions?  If that had been in place, members of this committee would have paid $170,000 in sales taxes.  (Ron Mortensen)  To read more, click here.

Utah tax reform – grow government; socialize business costs while privatizing profits; soak the middle class

Ronald Mortensen, Ph.D., Co-Founder CitizensForTaxFairness.org

This is the first in a series of commentaries on the proposals put forth by the Utah Tax Restructuring and Equalization Task Force. It provides a high level overview of the tax reform proposals.  Future articles will look as specific proposals.

From the perspective of a taxpayer without high paid lobbyists or political clout, the legislature and governor’s proposed tax reform looks like an overly complex exercise designed to guarantee continued explosive growth in state spending while promoting corporate socialism primarily paid for by middle-income taxpayers. Five major things jump out of the Task Force’s draft proposals. Click here to read the entire article.

Utah tax reform:  Create a crisis and sell it to the public

Ronald Mortensen, Ph.D.

Co-Founder, CitizensForTaxFairness.org

July 29, 2019

Talking Points

 Tax Reform Task Force Meeting – Layton 7-8-19

 Ronald Mortensen, CitizensForTaxFairness.org

1. Utah’s Republican governors and legislators have a tax and spending problem.

   1. During the past 20 years, population increased by 45% and inflation by 44%.  However, the state budget, exclusive of federal funds, increased by 146%.  Add in federal funds and it’s up 160%.

   2. So state spending increased 3 times faster than population growth, 60% faster than population and inflation combined and roughly 2.6 times faster than median income which increased by 55%.

       

2. Utah has a sales tax exemption problem.

   1. Exemptions extended to certain privileged, big businesses allow them to socialize their costs and privatize their profits by avoiding all sales and corporate income tax payments.

      1. For example, a privileged Utah company that manufactures Wigits pays no sales tax on business inputs. 

         1. Thus, during the production process no sales tax is collected on any of the say, $500,000 in inputs.

         2. And when the completed the Wigit is sold out of state for $1,000,000 no Utah state sales tax is collected—a loss of over $60,000 in sales tax revenue.

         3. Likewise, the privileged business pays no income tax on revenue from the Wigits sold out-of-state.

      2. Therefore, low and middle-income earners along with small businesses are left to make up the tax losses.

          

3. If you are determined to modernize the tax structure, then do something more than just rearranging the chairs on the Titanic.

   1. Implement the PowerBall and MegaMillion Lotteries so Utahns can buy lottery tickets without driving to Idaho or Wyoming.

      1. In addition to the revenue from ticket sales, a one billion dollar Utah winner would pay the state 50 million dollars in additional income tax.

   2. Consider legalizing and taxing online sports betting – a $300 billion business and Utahns already bet on sports.

   3. Require candidates for political office to pay a sales tax on all campaign donations that they take in.  The 2018, 4th Congressional District race would have brought in roughly $550,000 in sales tax revenue to the state ($9 million spent by both candidates--$5,786,427 Love, $3,384,890 McAdams).  The Salt Lake Mayoral race to date would have brought in $60,000.