All Utahns are just over a week away from the end of the Legislative Session. Each year, your Taxpayers Association watches for tax legislation and takes positions on bills. This year, we are tracking over 70 bills and are actively working to make sure sound tax policy is enacted at the state and local level. 

Here are just a few of the bills we’re activated on: 

HB 356 – Railroad Amendments (Ferry)

The Utah Taxpayers Association has long stood on the philosophy that eliminating sales taxes on business inputs is sound tax policy. By removing these sales taxes, Utah works to end tax pyramiding. By ending this practice, the consumer will generally pay a lower cost since there aren’t layers of taxes built into the final price. 

Removing tax pyramiding is also good business practice, and strongly affects how a state’s economy performs. Utah’s legislatures have followed your Taxpayers Association stance on eliminating taxes on business inputs and Utah’s families and businesses have benefited. 

HB 356 seeks to undo part of the major work that has been done to keep Utah #1 for Best Economic Outlook for 12 years running. The bill looks to remove the sales tax exemption on fuel for locomotives in order to build pedestrian and road travel crossways at railroad tracks. 

While this may sound altruistic, raising the costs the railroad needs to pay will ripple throughout Utah’s economic system. Increased taxes on railroads can mean greater costs on items shipped into and around the state, whether that be housing materials, fuel, or perhaps even items purchased online. 

Your Taxpayers Association remains highly opposed to this bill and are working with legislative leadership and the governor to find a more appropriate solution. 

SB 222 – Business Input Sales Tax Amendments (Hemmert)

As we just mentioned, eliminating business inputs creates a strong economic system and benefits all Utahns. SB 222 gets this policy right by creating a sales tax exemption for the production or development of software. 

Our economic system has changed dramatically over the past two decades, relying more on digital products and services than ever before. As our economy changes, so must our definition of business inputs. When producing an item, many items of tangible personal property are used to develop software that are then sold to the end consumer. SB 222 would exempt the sales tax on the business tangible personal property used to develop software. 

This idea came to your Taxpayers Association from one of our members, and we are strongly advocating for this legislation to pass this year. 

SJR 9 – Proposal to Amend Utah Constitution – Use of Income Tax Revenue (McCay)

Utah’s tax reform process over 2019 was tumultuous and 8% of voters didn’t find the Legislature’s  solution appropriate and stopped it through a referendum. (Learn more about that proposal and the Association’s position here.) Following the repeal of that proposal, Utah still has a spending flexibility problem. 

All of Utah’s income tax is dedicated toward education funding, and cannot be used for other purposes. The general fund (primarily driven by sales tax revenue) has more demands on it than ever before, as social services costs, such as Medicaid, continue to increase. Utah’s demand for transportation also continues to increase, which puts additional strain on the general fund. While Utah’s income tax revenue climbs higher with massive surpluses, the general fund does not grow to the same extent. 

SJR 9 tries to help alleviate some of the pressure by expanding the constitutional earmark on income tax to also be used for children’s health programs and people with disabilities. 

This greater flexibility frees up more general fund money to be used on helping those in need and expanding programs to ensure Utah’s indigent population is taken care of. 

This resolution, as a Constitutional amendment, would require a ⅔ vote of each body of the Legislature and a vote of the people in order to take effect. 

Your Taxpayers Association is supportive of this proposal. 

SB 69 – Tax Credit for Educator Expenses (Anderegg)

Sen. Jake Anderegg has a proposal to provide even more money for teachers when they purchase classroom expenses from their own pockets, through the form of an income tax credit. While there is already a tax credit on the federal level of $250, many teachers have said this is not enough. 

Sen. Anderegg’s legislation would allow for a teacher to receive a state nonrefundable income tax credit for up to $500 for supplies purchased. 

This is a very appropriate use of taxpayer dollars considering that teachers have greater control of the supplies purchased within the classroom, without having to wait for district support. The income tax credit, which is taken from the Education Fund, is being directly used to fund a student’s education. 

Your Taxpayers Association is supportive of this legislation. 

SB 53 – Calculation of Income Tax Amendments (Fillmore)

When federal tax reform was passed in 2017, Utah received a windfall in taxes since it couples with the federal government on several tax policies. 

The bill restores the dependent exemption which was eliminated in 2017 federal tax reform. The bill would provide $3,113 per dependent to Utah families. Many Utah families saw a significant tax increase in 2018 and moving forward. 

If this bill passes, Utah families can expect to see a significant tax decrease. 

In addition, because of this coupling on the issue called Global Intangible Low Taxed Income (GILTI), some companies have seen a substantial tax increase, which provided significant new funding to the state, without the Legislature making any policy call as to whether it was appropriate or not. This bill decouples Utah from federal tax code on GILTI and ends the unfair discrimination against Utah companies that do business in other countries.

Your Taxpayers Association strongly supports this bill. 

SB 150 – Transportation Governance and Funding Amendments (Harper)

Utah’s transportation system is subsidized by the general fund to the tune of hundreds of millions of dollars a year. This is due to the diminishing  power of the gas tax, which has begun to flatten as vehicles become more efficient and the state’s population continues to grow. 

Your Taxpayers Association believes that a road usage charge (RUC) is the solution. RUC, essentially, has a driver pay for the miles they use. Eventually, the RUC would replace the gas tax as the primary funding solution for Utah’s transportation system. 

SB 150 requires that UDOT submit a written proposal in 2021 to implement the RUC. We are supportive of this legislation. 

To view our entire Watchlist, click here.