Utah tax reform: Create a crisis and sell it to the public
Ronald Mortensen, Ph.D.
Last Updated July 29, 2019
governor and Republican legislators created a funding imbalance by driving up
income tax collections while suppressing sales tax collections.
packaged this as a crisis in order to convince Utahns that the state has to
find new things to tax.
end-game is for the governor to call a special session and for legislators to enact
taxes on more things with the incidence of those taxes falling primarily on low
and middle-income Utahns and on small businesses.
voting for the bill will be rewarded with large campaign contributions from big
businesses and by the uber-rich since they will benefit the most from it.
take action to stop this, they will soon be paying more taxes in order to fund
even more state spending, to further socialize big business costs and to reduce
income taxes paid by the uber-rich.
The Republican governor of
Utah and Republican legislative leaders, with strong encouragement and support
from the Enemy
of the Taxpayer, Salt Lake Chamber of
Commerce and the Kem C. Gardner Public Policy Institute, have concluded that the state of Utah has to find
something else to tax even though state spending has increased by 146% during
the past 20 years while population growth was 45% and inflation 44%.
Republicans create a funding imbalance to justify
taxing new things
In order to maintain the
exponential growth of state government, Republicans need to convince the public
that the state needs new things to tax.
And just how do they do that?
1. Drive up income tax
by increasing taxes on low- and middle-income Utahns by as much as $1,200 for
larger families as explained in the footnote.
2. Suppress sales tax collections[ii]
by granting huge exemptions to privileged businesses, diluting the internet
sales tax revenue by using it to offset the sales tax exemptions granted to
politically well-connected businesses, and excluding any remaining increase in
internet sales tax revenue from the tax reform discussion as explained in the
3. Package the above as a “funding
imbalance” crisis and use taxpayer funds to create and populate a propaganda
website titled “Stronger Futures”—that coincidentally looks a lot like the Salt Lake Chamber’s tax modernization propaganda website.
Manipulate sales tax data presented to the public to bolster the governor’s and
4. Take the propaganda show
complete with fake data on the road in order to convince the public that the Republican
generated tax imbalance justifies finding still more ways to tax the citizens.
5. Have the Republican
governor call a special session of the legislature where Republican legislators
quickly enact taxes on more things with the incidence of those taxes falling
primarily on low and middle-income Utahns and on small businesses. .
6. Bonus. Collect campaign donations from big businesses and high income Utahns whose taxes will be reduced
by tax reform and who will be able to socialize still more of their costs while
privatizing still more of their profits.
Use those donations to defeat anyone who dares run against legislators
who voted for this so-called tax reform.
Low- and middle income taxpayers lose; uber-rich win.
Thus, Utah’s Republican
governor and Republican legislators have created a tax crisis in order to
justify still more taxes on the citizens of Utah. And those new taxes will be paid primarily by
low- and middle-income Utahns and small businesses. Big businesses will maintain their sales tax
exemptions and continue to socialize their costs while privatizing the
profits. The uber-rich will benefit the
most from any reduction in income tax rates.
So, unless Utahns take action
to stop this, they will soon be paying more taxes in order to fund even more
state spending, to further socialize big business costs and to reduce income
taxes paid by the uber-rich.
up income tax revenue.
Federal tax reform
resulted in the state of Utah realizing sharply increased
income tax revenue from low- and middle-income Utah
families. This occurred because, as reported by the
Salt Lake Tribune “Federal reforms in 2017 eliminated the $3,038-per-dependent
state tax exemption that helped lower tax bills for Utahns earning up to about
$150,000. As a result, lower- and moderate-income households that benefited
most from the tax credit will pay more in state tax.”
Republican legislators and the
Republican governor knew that this was the case but elected to retain most of
the increase in income tax revenue by refusing to fully reinstate the dependent
state tax exemption as neighboring Idaho did. Utah Republicans did reduce the income tax
from 5% to 4.95% but that primarily benefited high income earners and
corporations while leaving Utah families who lost the dependent exemption to
In fact, according to the Utah Foundation:
“The federal income tax changes mean that
lower- and moderate-income households benefiting from the Utah Taxpayer Tax
Credit will pay more in Utah state income taxes. While the Legislature acted to
reduce the windfall from the federal tax change by reducing the tax rate, the
combined changes will disproportionately benefit the highest income earners.” (Click here to read the
entire report which includes specific examples of the impact on families).
According to a report by KSL
Then, in October, lawmakers were warned
again. A legislative fiscal analyst said even with that new credit, state taxes
were about to skyrocket, in some cases more than $1,200 for larger families.
So, Republican legislators and
the Republican governor stuck it to families in order to inflate income tax
[ii] Suppress sales
At the same time they were
increasing income tax revenue, the Republican legislators and Republican
governor drove down sales tax collections by using tens of millions of dollars
of new revenue from internet taxes to provide sales tax breaks for privileged, undisclosed businesses. In addition, they didn’t include the
remaining projected sales tax revenue on internet sales in their propaganda
presentations in order to maintain as wide as tax imbalance as possible. According to a news report:
During a special legislative session in
earmarked roughly $55 million to manufacturers. It’s money
the state is expecting to get beginning Jan. 1, 2019 from out-of-sate online
sales tax collections.
Legislative Research and General Counsel
Office records show the companies that got the $55 million are grouped under
the title of "Machinery, Equipment or Parts." That's as specific as
it gets. In fiscal year 2016, they got $122 million in tax exemptions. Dabakis
says the $55 million was added to that this year to offset the increase in
soon-to-be online sales tax.
If that weren’t enough,
Republican legislators and Utah’s Republican governor have given certain
businesses a total exemption from sales taxes on goods produced in the state
but sold to purchasers out of state.
Because of Utah’s large positive trade balance, this further reduces
sales tax collections and makes the tax imbalance even larger.