SALT LAKE CITY — Conservatives like to warn against government tax policies that pick winners and losers, so it seems a bit curious that the Utah Legislature’s Tax Restructuring and Equalization Task Force, controlled by Republicans, has spent the past several weeks doing just that.
What began as an effort to extend sales taxes to services has now become an effort in picking who gets hit and who doesn’t.
The latest list came out this week. Portrait photographers no longer are on the tax list. Nonemergency veterinary care and pet boarding are. Sightseeing bus companies would be taxed, but tour operators would not. Parking lots and garage owners would pay, but automobile driving schools would not. Body piercing, tanning and dating services would be taxed, but sports and recreation instruction would not. Roofers, plumbers and other people who do household fixups would be taxed, but only for work that’s considered maintenance and repair, not a capital improvement.
The list goes on. All I can say is, thank goodness the task force was sensible enough to exempt newspaper publishing.
I’m joking, of course, but only a little. I could give you an impassioned speech as to why newspaper sales should not be taxed, but the truth is, the owners of every type of business on the list could give such a speech and make it quite convincing.
Not surprisingly, several such people showed up at the task force’s last meeting on Nov. 7. A veterinarian was there. “I’m very concerned that my profession is being singled out,” he said, noting wryly that the number of attorneys, accountants and real estate agents are far greater than the number of veterinarians.
The same ratio exists in the Legislature, which may be why attorneys, accountants and real estate agents aren’t on the list to be taxed.
Taxes don’t just affect the businesses. They affect their customers.
A representative of Enterprise Rental Car argued that car rental customers already are taxed at 17% and would have to pay 18.5% under the latest proposal. Hotels and restaurants are taxed much less, he said.
Half of the state’s car rental customers are Utah residents who need a car when they have had an accident or need a big repair. But if you’re a tourist and you rent at the airport, the tax already is more than 40%, which drives a lot of people to use Uber and Lyft instead, he said, adding, “I don’t know why we target and hate these customers so much.”
Taxes don’t just affect the businesses. They affect their customers.
Hate is such an ugly word. Utah lawmakers are motivated by a variety of things. Hate tends to rise only when the federal government is involved. Sen. Lyle Hillyard, R-Logan, told the Deseret News the task force tried to look at which services were really needed, and which were optional purchases.
But, of course, that list can be subjective, too. Hillyard said he supports taxing veterinary services because he and his wife have lived just fine for 55 years without a dog. I’m guessing other people would consider veterinary care less of an option.
I don’t envy those who are in charge of this tax-reform exercise. No matter where they squeeze the tax balloon, some other part will begin to bulge.
And yet, they seem adept at making things particularly difficult on themselves. The latest proposal calls for cutting the state’s flat income tax rate from 4.95% to 4.58%, responding to a public clamor that no one has yet heard.
Right now, the Utah Constitution requires that every penny of income tax go toward public and higher education, but the long-term plan is to ask taxpayers to vote to change that, allowing lawmakers to use that money for other things.
In the meantime, however, educators see a tax cut that would reduce the money available to them immediately, while hearing assurances that lawmakers eventually will find an alternate funding source for them … somewhere.
Drivers — which means just about every adult — are in a similar fix. A new sales tax on gas is described as temporary, but it doesn’t, as yet, come with an expiration date.
People tend to respect fairness, even if it involves taxes. Picking which businesses pay and which don’t doesn’t meet that definition. Neither do vague promises that problems will be fixed.
As a conservative might say, these things make credible tax reform a lot harder.