How would the Legislature’s tax cut proposals affect everyday Utahns?
Utah lawmakers are set to enact record tax cuts and possibly eliminate the tax on food sales during this legislative session. But what does this mean for you?
According to lawmakers, a family of four making $80,000 per year could save an additional $208, which works out to about $17 per month. That’s if the Legislature passes a $400-million tax cut bill.
HB54 would lower the state income tax rate from 4.85% to 4.65%, as well as expand eligibility for Social Security tax credits. It would also add a tax benefit for pregnant people through the first year of their child’s life and increase the earned-income tax credit from 15% to 20% of the federal level.
“This is slanted towards the higher income deciles simply because those upper brackets pay more,” he said. “So when we reduce the rate, while all benefit by the same rate cut, the lower brackets pay less and in the case of the lowest brackets, they're not paying anything. So it's impossible to cut that which you're not actually paying.”
Another bill would eliminate the state 1.75% sales tax on food. HB101 is also linked to an effort to amend the Utah Constitution and end the education earmark for state income tax. That change would have to have the approval of Utah voters in 2024.
“Removing the constitutional earmark for income tax revenue gives the state the flexibility to eliminate the state sales tax on food,” said sponsor Rep. Judy Weeks Rohner, R-West Valley City. “The people of this state deserve to be able to be heard, to be able to make a decision if this is what they want.”
Utah’s combined food sales tax rate is 3%. The bill does not affect local tax rates on food.
Weeks Rohner said her bill would result in a $20 million tax reduction. Lawmakers’ past efforts to amend the state tax on food have stalled because the reduction in revenue could not be made up elsewhere.
There is bipartisan support, but some have expressed unease at linking the cut with eliminating the education earmark for state income tax.
“We have been cutting taxes for years, and by doing so we are neglecting the long-term needs of our children,” said Voices for Utah Children Executive Director Moe Hickey. “We need to invest more in our K-12 system to meet the needs of our children.”
Others say while it’s disappointing to see the two issues linked, there is a need for food tax relief.
“When something there's going to be opposition to gets linked to something that you support, it's always a little disheartening,” said the deputy executive director of the Crossroads Urban Center, Bill Tibbitts. “The number of people we served [at] our food pantries last year increased by 75%. We know people are struggling and if we can get rid of the sales tax on food that would reduce the suffering a bit.”
Eliminating the state food tax could also bring relief for those living on fixed incomes.
“This house bill would actually help with these veterans that are retired, that are on a fixed budget,” said Ted Garcia, who is a small business owner and disabled veteran. “I was at the store not even a couple of days ago with my son. [We] walked out of Wal-Mart with two bags of groceries, and it was $64. And he looked at me and he says, ‘dad, what do we buy?’”
Both tax bills passed out of committee Feb. 21 and now head to the full House for further consideration.