A Path to Cut Taxes for the Utah Legislature
Talks are heating up at the State Capitol on how lawmakers can cut taxes for Utahns before they adjourn on the first Friday in March.
Proposals include cutting the state income tax rate, shifting property taxes so that businesses pay more while residents pay less, and offering a host of tax credits to favor certain taxpayers.
Some of these ideas have merit (cutting income taxes is always a good idea), but others, while well intentioned, need to be shelved.
House Bill 161 and HJR 7 would increase the state’s primary residential exemption from 45 percent to 60 percent, which would amount to a tax cut for residents. However, the other side of the legislation is problematic, as it would shift the burden of paying for that tax cut onto business properties—in other words, a tax increase on businesses.
During the first two weeks of the session, we have spent time working with legislators to help them understand that a tax increase on businesses won’t benefit residents, as businesses will simply pass those costs on to customers or employees.
Legislators have responded by asking for alternatives to their proposal, and we accept that challenge by presenting our plan to cut taxes this year.
First, lower the statewide property tax levy. This is the one levy the legislature controls. The money generated flows directly back to school districts, but the legislature could appropriate state funds to hold school districts harmless while giving everyone in the state a tax break—not just one segment of taxpayers.
Second, pass Rep. Karen Peterson’s (R–Clinton) HB 236, which improves Utah’s truth-in-taxation system by increasing public notice of potential tax increases and altering the budgeting system for taxing entities to ensure they are not spending potential tax-increase dollars before holding their truth-in-taxation hearings.
Third, ensure county assessors have all the tools they need to determine accurate values for all property types. When assessors can correctly value properties, the property tax burden is more fairly distributed among taxpayers. If taxpayers are confident their property values are accurate, they save money by avoiding appeals and potentially costly litigation.
This tax package is a better path forward for the state. It is equitable for every taxpayer, strengthens Utah’s truth-in-taxation law, and protects taxpayers by giving assessors greater access to data needed to determine true property values. It also avoids forcing a vote to change the state’s constitution, as some proposals under consideration would require.
In the end, the Utah Taxpayers Association and the legislature want the same thing: a lower burden on Utah’s taxpayers. We believe the proposal outlined above is the best way to accomplish that.