There has been a lot of discussion over the past several months about tax cuts for Utah families. This culminated in several interim bills being passed last week that will almost certainly carry the discussion into the legislative session.
It will come as a breath of fresh air to people that nearly every major tax is on the table. Property, income, and sales tax on food are all up for discussion. Today I’ll just focus on one, the income tax.
We’ve supported income tax cuts in the past, including last year. But why?
Simply put, people have a right to keep what they earn for their labor and ingenuity. At a time when people are struggling to make ends meet with inflation, a little more money in their pockets would go a long way. Rather than the government spending it on creating new programs or growing old ones, the people of Utah can put it to better use.
Not to mention the fact that many western states have been slashing their income tax rates recently and seeing their state revenue grow because of it. That’s right. Oftentimes, cutting taxes leads to more revenue for the state.
One of the aspects of this conversation that is usually overlooked is how reductions in the corporate income tax rate are one of best bangs for the buck when it comes to tax cuts. Corporate income taxes are a drag on the economy, and in the end they are simply passed on to the consumer. A significant decrease in the corporate income tax rate would help both small businesses and important sectors of Utah’s economy.
One complaint made about the idea of lowering the income tax from 4.85% to 4.8% is that it would hardly have an effect on Utahns. We agree, which is why back in 2018 we advocated for a reduction down to 4%. For Utahns to actually see the change on their paycheck, it needs to be significant.
The Utah Taxpayers Association has been advocating for a decrease down to 4.5%. That should be a no-brainer for the Utah Legislature, assuming that enough of the $1.3 billion surplus (which will probably be larger come February 2023) is considered “ongoing” and not just one-time money. If possible, the Legislature should consider going even further.
At a time when people are making cuts to their own budget, the state government needs to strongly consider giving back excess revenue to the people it took it from.