Add the state Democratic Party to the list of groups seriously considering a citizen initiative petition for 1994.
Dave Jones, state chairman and member of the Utah House, says that party leaders are looking at running a "tax fairness" petition next year. "We (Democrats) have tried to reform Utah's tax structure for years and they (the Republican majority in the Legislature) won't let us. This petition is one way to do it."We want a real middle-income tax cut for Utahns," said Jones. "We're not going to get that out of the federal government this year or next. I think we can deliver that at the state level, but probably only through a citizen initiative petition because I don't think the Republicans will do it," Jones said.
Under Utah law, any group that can get 76,253 signatures of registered voters on a petition can get the petition before voters in the general election. If citizens approve of the measure at the ballot box, it becomes law.
Merrill Cook and his Independent Party of Utah already are collecting signatures on a petition that would limit the terms of federal, state and county officials and would require a runoff election if no candidate gets more than 50 percent of the vote in a general election.
Other groups also are considering running initiative petitions next year.
Democrats have argued for some time that Utah's income tax law should be changed. Because the state hasn't changed its tax brackets since the 1970s, inflation has pushed most Utahns into the highest tax bracket, 7.2 percent of taxable income. More than 75 percent of Utah households fall into the highest tax bracket, with only the poorest of Utahns paying a lower rate.
In reality, Utah has a flat-rate tax - but a flat-rate tax that still includes exemptions for children, mortgage interest and a number of other items.
"Utah has a very regressive income tax," says Jones. "There is no progressivity." A progressive tax means the higher the income goes, the greater the tax rate imposed. Saturday, a brainstorming session among top Democrats to decide the party issues for 1994 was held. Jones said, "the poorest among us in that room paid the same percent in state income tax as a multimillionaire. It is wrong, it is unfair and the Legislature won't act."
In 1987, to get Democratic votes needed to pass the largest tax increase in the state's history, legislative Republicans agreed to remove the state income tax exemption for federal income taxes paid - a kind of back-door approach to increasing the state income tax's progressivity. Up until then, one could deduct federal taxes from income before figuring out how much state income tax was owed. To get that deduction removed, Democratic legislators had to agree to a sales tax hike, as well.
Since richer Utahns pay higher federal taxes, removing the deduction was a big state tax increase for wealthier Utahns. Republicans soon heard about it. As state revenues came in higher than expected over the next several years, and Republicans sought to keep their promise to reduce taxes in the face of a citizen tax revolt, Republican lawmakers - over the objection of many Democrats - put part of federal tax deduction back on the books.
The result, Democrats argue, is to make the state income tax system even more regressive than before - with richer Utahns paying less on a percentage basis than poorer Utahns. (That's not to say that richer Utahns actually pay less money in state income taxes than poorer Utahns. The rich do pay more money. But, overall, the percentage that richer Utahns pay is the same, or perhaps even less because of income-sheltering techniques, than poorer Utahns pay).
Jones said the Democrats' "tax fairness" petition would be revenue neutral - not cost the state any money, not raise income tax revenues overall. But, of course, it would raise the taxes on more well-to-do Utahns, lower taxes on middle-income and poorer Utahns, he said. It would be a tax shift, not an overall tax increase, Jones said.