Utah tax cut bill now includes targeted tax credits for low-income people
The Utah House has added some extras to the Senate’s tax cut bill, S.B. 59. In addition to an across the board corporate and income tax cut, the legislation now includes an earned income tax credit to benefit low-income families, as well as increasing tax credits for low-income people on their social security benefits. It’s estimated to cost about $190 million.
The legislation unanimously passed the House Revenue and Taxation Committee Friday afternoon.
Rep. Casey Snider, R-Paradise, the bill’s House sponsor, said he wants to “create an opportunity to benefit” all Utahns with tax relief.
“A tax cut at the income level is — as we look at tax policy broadly — the best,” Snider said. “But we have to recognize there are some holes as we move forward with that. And we've hopefully tried to address those in a way that maintains the longevity of these tax cuts through time and allows us to do our due diligence with regards to those monies that we have in state coffers.”
Current law allows people who make less than a certain amount — $50,000 for married couples filing jointly or $30,000 for a single person — to get a nonrefundable tax credit for money they bring in through social security benefits. They can use that credit toward other taxes they owe. If someone makes more than that, it shrinks $0.025 for every dollar over those amounts that the person makes in income.
The proposed legislation increases those income amounts to $62,000 for married couples filing jointly and $37,000 for a single person. That means more people would qualify for bigger tax credits for the income they bring in through social security benefits.
The bill also creates an earned income tax credit for state taxes, mirroring the federal EITC. Low-income people would get a nonrefundable credit equal to 15% of what they get under the federal EITC.
Snider said offering refundable credits wouldn’t be responsible.
“It is good policy to not provide additional handouts to those that haven't contributed,” Snider said. “The underlying premise of this is that we do provide real tax relief for individuals, but we don't create handouts.”
The version that the Senate approved just cuts the corporate and income tax levels by 0.1%, which would cost the state about $160 million each year. For a family of four making $72,000, that would mean $100 off their income tax bill. Those provisions are still in the House’s version of the bill.
Rep. Andrew Stoddard, D-Sandy, tried to amend the bill so that the cuts only applied to single filers making less than $100,000 per year and joint filers making less than $200,000 per year.
“We need to be targeted in this,” he said. “Call me old fashioned, but part of my belief system is that those who have the means need to take care of those who don't.”
But Rep. Karianne Lisonbee, R-Clearfield, said that amendment wouldn't be fair.
“Whenever we as a government draw an arbitrary line, we pick winners and losers,” she said. “We have a strong economy in the state of Utah and we don't need to be picking winners or losers in this case.”
Critics of the overall income tax credit said the money would be better spent on social services. Lisa Stamps told the committee her 25-year-old daughter, who has autism, apraxia, ADHD and anxiety, has struggled to get support from the state’s People With Disabilities Division.
“It's repugnant to me that our Legislature would hear requests for appropriations for over $2 billion, double this year's tax surplus, and instead choose to give a tax cut,” she said. “We're a state that purports to care about children and families. Let's put our money where our mouth is and pool our taxes instead of cutting them to provide for the needs of the greater community.”
But other critics said the cuts don’t go far enough.
“If you look at the revenue surpluses we've been seeing recently, I think we could do better for taxpayers,” said Rep. Nelson Abbott, R-Orem. “We ought to be giving [that] back to the taxpayers. Giving back is probably the wrong word to use. It’s their money in the first place. We're the ones taking it, so we should stop.”