In the next week or so, state leaders will receive updated revenue figures as they put together final budgets before the end of the 2023 legislative session.

Everyone who follows the revenue picture, of course, already knows what an honest update will likely say — minimally, another $400 million in ongoing revenue with another $600 million in one-time funds. This means that the ongoing revenue available will likely be close to $2.3 billion, in addition to $2.7 billion in one-time monies. In total, we should expect to see 5 billion additional dollars. And almost all of it will be spent.

We suggest a more balanced approach to budgeting that looks further ahead and considers future generations. With $5 billion in one-time and ongoing money available, legislators can afford to make one of the largest investments in Utah’s budget history with an $800 million tax cut.

Two considerations lead us to this conclusion.

First, the No. 1 concern of most households today is inflation. State government has been the beneficiary of high inflation, while at the same time placing a greater burden on households as a driver of that very inflation.

Government spending growth and the subsequent market distortion it creates, hits especially hard for that 60% of households whose wages are not keeping up. Because it takes time for an income tax rate reduction to work its way into stronger growth, a thoughtful income tax rate of 4.5% would do a better job at lowering inflation than more inflation-inducing “one-time” development spending or tax rebates.

Secondly, domestic in-migration is likely to slow and Utah’s birthrate is expected to be at or below replacement level in the coming generations. We can expect to see a shrinking population within two to three generations. If you think it’s difficult dealing with growth, wait until you have to deal with the challenges of population movement in the opposite direction. 

Lowering the income tax rate to 4.5% won’t generate growth in the short term, which is a concern of many, but it has the potential to generate growth in the years to come — when we’ll need it most.

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Despite the rhetoric, Utah is far from enacting the largest tax cut in state history. From 2006 to 2008, legislators opted for cumulative cuts of around 11%. Through this past session, reduction proposals are at about one-half of 1%. Gas and property tax increases have generated much more revenue than was needed and the coffers are flush. 

Even with significantly increased state government spending, the Utah Legislature could give the people an $800 million tax cut, putting us at about 9.5%. Next session, if our elected representatives feel comfortable with the economy, they could go further and give the people even more of their hard-earned dollars to sustain themselves and their families with another 3% cut. This would show true leadership and foresight in positioning Utah for the future, while treating its citizens as partners.

We at Freedom Front of Utah recommend that our state representatives do what is best for the people, today and in the future, by insisting on a 4.5% tax rate. If our top concern is our children’s futures, then we should take steps to improve their financial outlook. Lowering the income tax rate to 4.5% is one of the best moves legislators can make this session to increase Utah’s, and future generations’, likelihood of success.

Carolyn Phippen is the executive director of Freedom Front of Utah. Thomas Young is an economist.