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It’s time for tax relief for Utah families

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Senate President Stuart Adams, R-Layton, center top, leads a special session of the Utah Legislature in the Senate chambers to deal with myriad COVID-19 budget changes at the Capitol in Salt Lake City on Thursday, June 18, 2020.

Steve Griffin, Deseret News

The Utah Legislature has done an outstanding job of adjusting quickly to the COVID-19 pandemic, its resulting economic turmoil and reduced tax revenues. Their decisive action in cutting budgets and ratcheting back spending in a series of special sessions over the last few months has set Utah on sound footing while avoiding tax hikes. Utah is in an enviable position compared to many other states who face extremely severe budget shortfalls. We applaud the quick action of the Legislature and the foresight of legislators who, for years, have taken steps to ensure Utah remains strong, even in tough times. 

However, there is one more thing the Legislature and the governor need to do. Utah’s families have seen economic devastation including job losses, layoffs, furloughs, wage cuts and closures of the businesses that employ them. Working families are also having to juggle children at home due to sudden school closures. Utahns also face increasing local property taxes to cities, counties and school districts.

The time has come to provide state-level tax relief to the families of Utah. Utah families benefited from federal income tax cuts as a result of the 2017 federal tax reform package. However, these same families saw much higher state income taxes because the dependent exemption was lost in the federal tax reform. These higher taxes on Utah families created an unintended windfall to the state that still has not been returned to taxpayers. Idaho and Arizona, our neighboring states that also have a very high ratio of children per family, immediately cut taxes and returned this windfall to families. Utah’s legislature has been silent on this issue for three consecutive years now. 

A recent updated revenue report from Utah State Tax Commission, the Governor’s Office of Management and Budget, and the Office of the Legislative Fiscal Analyst shows that restoring the dependent exemption is entirely possible without requiring budget cuts. The Legislature recently updated its revenue forecasts in June, and they are already proving too pessimistic. The recent fiscal year end is currently showing an income tax surplus over the recently revised forecast of about $49 million. 

In addition, sales tax revenue has actually continued to increase in spite of the pandemic due to Utah collecting sales tax from online purchases in 2019 and beyond. So, while certain sectors of the economy like tourism and hotels have been eviscerated, internet retail sales and food sales have been rapidly increasing. That is even before other revenue items get posted with final fiscal year-end accounting. The overall General Fund/Education Fund surplus is expected to rise to well over $100 million by the end of the year. 

That is approaching the needed amount to restore the dependent exemption and that revenue should be returned to Utah families during this critical time. The Legislature attempted to do it with the tax reform bill in 2019. It was a tax cut that was part of the more than $600 million in tax cuts included in the bill. Unfortunately, the bill never went into effect. Another push to restore the exemption was made in 2020 with the Taxpayers Association’s support, but didn’t make it across the finish line. 

Under the COVID-19 response, government hasn’t missed a beat and businesses are receiving help. We say now it’s time for Utah families. They deserve the same consideration that Idaho and Arizona families have already received.

Rusty Cannon is the vice president of the Utah Taxpayers Association.