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The reckless tax scheme that could ruin Utah’s future

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The reckless tax scheme that could ruin Utah’s future

May 20, 2024 | 4:25 pm ET
By Moe Hickey
The reckless tax scheme that could ruin Utah’s future
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The Capitol in Salt Lake City is pictured on Monday, May 6, 2024. (Photo by Spenser Heaps for Utah News Dispatch)

Utah leaders keep cutting Utah’s income tax rate, and they keep acting like they are doing us all a big favor. Now, they are openly discussing plans to smother the income tax rate down to ZERO. But they are not discussing the disastrous costs our state will pay for this political stunt.

If legislators completely strangle this entire stream of public revenue, they will have to either hollow out the public services paid for with that revenue, or find a new source of funding to maintain those services.

The future of public services in Utah, if they become even more poorly-funded than they are now, is bleak. Your child in a classroom with 40 other kids. Reduced hours of availability at the DMV. A longer wait to renew your business license. No one to pick up the phone when you have questions about unemployment. Higher tuition for your teen who goes to a state school.

Typically, community members aren’t excited about waiting in longer lines or paying exorbitant fees for basic services. If state leaders want to avoid public outcry, they will need to find revenue elsewhere to replace income tax funds. Where will that revenue — nearly 25% of our state budget — come from instead?

Alaska has no income tax, but makes millions from its vast oil and mineral deposits. Those resources account for approximately 85% of Alaska’s state budget, and residents get a thousand-dollar check in the mail every year from a special fund generated by oil and gas.

Our neighbor Nevada also has no income tax. They have plenty of gambling and casinos, though, raking in public revenue from sources Utah will never have.

Texas actually forbids income tax in their state constitution. But like Alaska, Texas is blessed with substantial oil and gas reserves. They also charge a $10 fee every time someone enters a strip club or other sexually-oriented business. Not a viable revenue stream for Utah.

Texas also has sales and property taxes higher than most states. In fact, Texans still end up paying, overall, about the same amount of their annual income in taxes as Utahns do (around 8%).

You see, our state leaders have not been honest about how their politically-motivated tax cutting is impacting your other taxes.

When the income tax rate goes down, local governments have to increase property taxes, sales taxes, fines and fees to maintain basic public services. Every time state leaders push down the income tax rate, your overall tax cost just pops up in other places.

Back in 2019, the legislature passed a tax package that would have dropped the income tax rate, while raising other taxes, like those on food and gas. Such changes would have shifted tax accountability away from Utah’s richest people, and onto the backs of low- and middle-income families. The public did not like it.

Before the question could be put to voters, the legislature hastily undid their own tax package. Then they spent the next four years passing the very income tax rate cuts their constituents had rejected. They also made it even harder for voters to voice their displeasure through ballot initiatives, cutting the public out of important conversations about state revenue.

Voices for Utah Children cares about taxes, because public revenue directly and positively benefits the lives of Utah kids. We cannot offer great opportunities for more children without contributing state revenue. Cutting income tax rates is politically trendy among state governments right now – but those cuts come at the expense of Utah families and their children. The short-term allure is not worth the future devastation.