SALT LAKE CITY — A bill that would boost the income tax rate from 5 percent to 7 percent on Utahns earning more than $250,000 failed to advance Wednesday in the Senate Revenue and Taxation Committee.
SB141, which had been dubbed the "Soak the Rich" bill by sponsor Sen. Jim Dabakis, D-Salt Lake City, would have collected an additional $321 million from around 21,100 taxpayers, an average of about $15,200 each.
Dabakis told the committee that restoring the former maximum tax rate on big earners should be part of the tax reform discussion, now going on largely behind closed doors among the Legislature's Republican supermajority.
"This needs to be part of the mix," he said.
Dabakis and Senate Minority Leader Gene Davis, D-Salt Lake City, the only committee members who voted to send the bill to the Senate floor, said it deserved to be part of the debate.
House and Senate Republicans have backed their leadership going forward on proposals to restore the full sales tax on food purchases and begin phasing out tax credits for Utahns making $100,000 or more.
Talk of tax reform comes as business and community leaders are advocating a ballot initiative that would increase the income tax rate by seven-eighths of 1 percent for all taxpayers, or more than 17 percent, to bring in $750 million for schools.
Under the Utah Constitution, income taxes go toward education. The top income tax rate was lowered under Gov. Jon Huntsman Jr. to make the state more attractive to business.
Dabakis said he was "not buying the idea that millionaires and billionaires" would leave the state if the top rate were changed back to 7 percent, noting the economic climate then "wasn't a hostile atmosphere" to business.