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

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.


First, there are so many varied and complex proposals that it appears as if they were deliberately designed to create confusion. If citizens cannot understand what is being proposed, they are effectively cut out of the process while legislators tell them “Just trust us.”


Second, despite assertions to the contrary, there is no realistic proposal to reign in state government spending which increased by a whopping 146% from 1999 to 2019—roughly three times faster than the median household income of Utah taxpayers. In fact, the Task Force seems determined to ensure that government spending continues to balloon since the much touted review of state spending on a rolling five-year schedule is little more than smoke and mirrors designed to make citizens think something is being done while spending continues to grow and grow and grow. 


Third, the proposals put forth by the Task Force do not favor the individual taxpayer. Rather they are designed to allow big businesses to socialize even more of their costs while privatizing the profits.


  • Big businesses are allowed to keep hundreds of millions of dollars of existing sales tax exemptions while benefiting from a reduction in the corporate income tax.

  • Utah produced goods that are sold out of state are exempt from all sales taxes since there are no sales taxes on inputs and no sales taxes are collected when the finished goods are exported out of state. Middle-income Utahns and to a lesser extent, low income Utahns are left to make up this massive loss in sales tax revenue.

  • Businesses that export goods produced in Utah do not pay corporate income taxes on the value of those goods. Once again Utahns are left to make up the loss in tax revenue.


Big businesses therefore socialize their costs while privatizing their profits. Individual taxpayers pay for this. Corporate socialism is alive and well in Utah.


Fourth, the proposed, individual income tax cuts are for the most-part nothing more than a clever sleight of hand by legislators. First, they picked middle class families’ pockets by reaping a windfall when federal tax reform wiped out the Utah dependent deduction.  Now they give these same families their own money back and claim they have cut taxes. (Legislators in neighboring Idaho fixed this issue so their citizens didn’t pay higher state income taxes to start with.)


Fifth, legislators significantly enhanced the so-called structural imbalance by deliberately increasing income tax collections on 2018 family income while sales tax revenues were being suppressed by hundreds of millions of dollars in exemptions granted to big businesses. The governor and legislature then used this deliberately created “crisis” to try, unsuccessfully, to rush a sales tax on all services through during the closing days of the 2019 legislature. That failed so they spent $150,000 on a propaganda campaign to come up with these draft proposals.

In conclusion, this proposed tax reform is an overly complex, contrived exercise designed to guarantee continued explosive growth in state spending while promoting corporate socialism paid for primarily by middle-income taxpayers. The Task Force needs to start thinking about the average citizens rather than selling them out.





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