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
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
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.