Child Welfare Advocates Urge Legislature To Consider Utah's Poor When Planning Tax Overhaul

Oct 18, 2019

Credit Voices For Utah Children

The Utah Legislature’s Tax Restructuring and Equalization Task Force will meet Tuesday at the Capitol. The organization Voices for Utah Children along with other low-income advocacy groups sent a letter requesting they examine how tax policy changes might affect Utah’s poor.

Matthew Weinstein with Voices for Utah Children works with the state legislators on the organization’s priorities. They’ve been around since 1985.

“We do research and policy advocacy aimed at the goal of insuring that all Utah children have the opportunity to achieve their full potential. When you’re focused on a goal like that, you’re mainly worried about the kids who are at risk of not achieving their potential. And that’s disproportionally going to be kids who are coming from lower income backgrounds especially kids from lower income minority communities."

Legislators are considering reinstating the grocery tax from the 1.7% to 4.85%. To offset the impacts on low-and middle-income families, the legislature’s recent report proposes a food tax credit of $100 per person. Weinstein says any sort of grocery tax credit would need to be well publicized.

“Even the earned income tax credit which averages in Utah about $2500 per family and goes as high as about 6300 or 6400. Twenty-five percent of the eligible households in Utah don’t file for it every year, is the estimate from the IRS.  So, if we go based on that, that a quarter of the eligible families wouldn’t file for this grocery tax credit, there’s definitely a need to do outreach and publicity to make sure the public knows about it.”

Weinstein says Utah’s tax system is regressive if all the taxes and fees from local governments are taken into the equation. Low- and middle-income earners in Utah are paying a higher tax rate than high income earners.

“The lowest Utah earners pay 7.5% of their income in taxes. Mostly sales and gas and property taxes. Middle income Utahns it goes up to 8.2% but then when you get to the top of the income scale, it drops all the way down to 6.7%.

They’ve proposed tax policy changes to the legislature such as an earned income tax credit which would make Utah the 30th state to adopt it nationwide.

“So that the working poor could keep some more of what they earn. We could remove the sales tax entirely from food as most other states have done. We could protect seniors on social security from having those benefits taxed. We could restore the income tax rate to 5% or increase it above that level to where it was before Governor Huntsman reduced the top rate from 7% to 5%."

According to the State Tax Commission, taxes paid as a share of household income peaked in the mid 1980’s. The issue of tax sufficiency to handle future needs was evaluated in a recent report by The Utah Foundation. Weinstein says his organization has concerns about Utah’s low level of education funding. He says teacher retention, pre-school and after school programs are insufficient. He also points out that Utah falls below the national average for high school graduation rates in white and Hispanic boys. He says higher education especially for Utah women, is not keeping pace with the rest of the country.

“And they found that the tax burden is the lowest it has been in 25 years, now that we’ve been cutting taxes for decades and have achieved a very low level of taxation.

The Tax Restructuring and Equalization Task Force meets on Tuesday at 4:30 in the House of Representatives Building in room 30 at the Capitol. This is the first meeting open to the public where comment will be taken.

A link to the Utah Foundation report:

http://www.utahfoundation.org/reports/a-lighter-load-utahs-changing-tax-burden/  

Draft publication of the Tax Restructuring Policy:

Proposal https://le.utah.gov/interim/2019/pdf/00004608.pdf