Senator Evan Vickers, R-Cedar City, stands in the Senate Chamber during the Utah Legislature General Meeting in 2021 at the Capitol in Salt Lake City on February 16, 2021. Vickers filed a bill to reduce Utah’s income taxes across the board. . (Kristin Murphy, Deseret News)
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SALT LAKE CITY – Towards a legislative session in 2022 to begin next week, lawmakers are already in line with tax cuts for Utahans.
There will be a lot of debate during the 45-day session before lawmakers decide what to do – but there is soon widespread support among at most of the GOP’s Utah legislature for at least some tax cuts.
The question is, what will the tax reduction take? And for how much?
A general reduction in income tax rates has already won the favor of several Republican lawmakers, including management. So far, three different Republican-backed bills have been tabled to reduce the state income tax rate from 4.95% to 4.9%, 4.75%, or 4.6%.
Legislative leader Evan Vickers, Senate Majority Leader R-Cedar City, is proposing the slightest cut, to 4.9%, which would cost the state about $ 78.5 million a year.
HB105’s Travis Seegmiller representative would cut the rate to 4.75%, which would cost about $ 320.6 million a year. Senator Dan McCay’s SB62 would go even further and cut the rate to 4.6%.
It is too early to say which proposal will win the Utah legislature by the end of the March session, but Senate President Stuart Adams R-Layton told Deseret News on Wednesday that he is “in favor of a reduction in income tax.” . “
“You may remember that I announced in 2021 that this was a year of tax cuts,” Adams said, returning to the legislature’s approval of a $ 100 million tax cut package for veterans, seniors and families with children. . “Now I’m saying that 2022 is a year of tax cuts – again.”
Lawmakers have already set aside $ 160 million this year – the same amount Governor Cox proposed in his recommended budget to use for a refundable food tax credit – for some form of tax cut.
Adams said he favored an approach to income tax reductions rather than Cox’s proposed food tax rebate because reducing the income tax rate would benefit all Utah and because Utah would compare to at least 14 other states that have reduced income taxes in the past year. income.
“To stay competitive, I think we need to reduce our income tax,” Adams said.
You may remember that in 2021 I announced that this was a year of tax cuts. Now I say that 2022 is a year of tax cuts – again.
– Senate President Stuart Adams
House Speaker Brad Wilson, R-Kaysville, also said he supported tax cuts during Wednesday’s conference on the Utah Taxpayers’ Legislative Outlook to 2022, although he did not talk about the details.
“We all feel that becoming Utah feels less affordable and more expensive to live in,” Wilson said. “We have to make sure that politics … makes this problem better, not worse. And we really need to focus on that.”
“One of the best ways to do that,” Wilson added, “is to ensure that tax policy allows more people to keep more money and spend it the way they want and need it.”
The Executive Committee on Allocation last month voted $ 160 million, setting a base budget for the General Meeting in 2022, based on revenue estimates that expected the state to have $ 930 million in new interim funds. After setting the base budget, lawmakers have an additional $ 219 million in rolling funds and more than $ 1 billion in lump sums they can spend this year.
While the governor prefers to use $ 160 million in food tax rebates – which he says will provide “much greater benefits for the poor” compared to lower income tax rates – Vickers, a sponsor of SB59, said the GOP Senate committee was “very accommodating.” . reduction of state income tax.
Vickers said lawmakers have backed other proposals to reduce taxes, “but income tax cuts seem to be number one.”
Vickers’ law would be the smallest tax cut for Utahans. He said he suggested that the figure begin with a “slight reduction,” but if lawmakers used all the $ 160 million set aside, the rate would fall to 4.85%.
“My guess,” Adams said, “is 4.85% of where we land.” However, he added that it is possible that lawmakers could set aside more than $ 160 million to reduce taxes.
Senate leaders “tend to prefer an approach where we make minor cuts,” Vickers said. “Now 10 points is a pretty good drop. But I know some suggest … even lower. But we feel it would be better to take it gradually.”
Vickers said it was possible to “cut a piece this year, and if the money is available next year, we will do a little more in four or five years than one big cut.” got for the worse.
“So we’ll probably change the law as soon as we start the session to go in that direction,” Vickers added. “And then we’ll discuss what the governor is proposing” for the food tax rebate. He also noted that further reductions in social security and military pensions were discussed, “although we took care of most of it.”
Asked how the Senate leadership views Cox’s food tax proposal, Vickers said, “Our committee would rather look at income tax first.”
“We haven’t paid income tax in the last few years,” he said. “We’ve made some significant tax cuts, but it hasn’t brought a general benefit, so we feel it’s time to look at income tax this year.”
In Cox’s argument that a food tax rebate would give a better advantage to low-income Utahans, Vickers said a reduction in income tax would “benefit everyone.”
“If you’re talking about dollar amounts, then yes, people who earn more will see a bigger drop in the dollar,” he said. “But for the same reason, if you’re talking about percentages, that percentage for an individual or middle- or low-income family is still significant in their budget. So we feel comfortable going in that direction.”
It is possible that Utah will see a combination of what lawmakers and Cox are proposing.
“Everything is on the table,” he said. “It’s a long session.”