Will Utah Raise Taxes?
People seem to be the most concerned about reports that Utah will extend the sales tax to items and services that currently are not taxed. That idea is a recurring favorite of the Utah Tax Review Commission. It simply is not going to happen. So, I’ll move on to other taxes.
As for increasing existing taxes, the primary targets popping up are tobacco, alcohol, and food.
Tobacco and alcohol tax increases could happen. The thinking is that these products do correlate with significant costs to the State (e.g., Medicaid costs to treat cancer and people who have been injured by drunk drivers).
The food tax debate will be interesting. The Utah Legislature largely believes that our taxes are too high, and that Utah and Utahns would be better off with lower taxes. When we cut taxes a few years back, though, the Senate did not favor reducing the sales tax on food (instead wanting to reduce elsewhere). We cut income tax and the food tax. It was a compromise, I kindly remind my new – and highly esteemed – Senate colleagues. To say the issue involved a big wrestling match between the House and Senate is to seriously understate matters. It’s a great story, worth telling at some point. For now, though, (if the determination is made that we need increased revenues), I think the tax on unprepared food could go back up, unless Gov. Herbert and the House fight hard to keep it off. (It is interesting to note, though, that the legislative father of reducing the food tax was President Waddoups – though he and I are seriously outnumbered on this one in the Senate).
An alternative strategy – and, in my opinion, a better one – is to work to not raise taxes at all (though I have to exclude the tobacco tax, where I think it is a fait accompli). I am proud that Governor Herbert seems to be adopting this approach. I’m very proud. I’d be damn proud, if this weren’t a family-friendly blog. We don’t need to raise taxes. The task is to match revenues and expenditures. It’s too easy for Government to look to the revenue side of the ledger, without seriously addressing the expenditure side. If Gov. Herbert is saying that he is against raising taxes – and, more importantly, if his proposed budget then matches that statement – that means that he is willing to take a hard look at state expenditures. That would be tremendously healthy for Utah.
A reality of government – sad but very true – is that expenditures aren’t watched closely enough during “up” years. (Utah does better than most states, but we still have room to improve). If expenditures then aren’t reined in during “down” years, the government-as-servant/citizen-as-master relationship is turned on its head. The “needs” of government become a significant burden on the people (e.g., California and the federal government).
Most of my constituents are tightening their belts. They should expect their government to do the same. If Gov. Herbert is with us, meaning we only need 38 House votes and 15 Senate votes, instead of veto-override numbers of 50 and 20 respectively, we can bring expenditures in line with revenues. If we do that, Utah will be well-positioned for an excellent recovery.
As for increasing existing taxes, the primary targets popping up are tobacco, alcohol, and food.
Tobacco and alcohol tax increases could happen. The thinking is that these products do correlate with significant costs to the State (e.g., Medicaid costs to treat cancer and people who have been injured by drunk drivers).
The food tax debate will be interesting. The Utah Legislature largely believes that our taxes are too high, and that Utah and Utahns would be better off with lower taxes. When we cut taxes a few years back, though, the Senate did not favor reducing the sales tax on food (instead wanting to reduce elsewhere). We cut income tax and the food tax. It was a compromise, I kindly remind my new – and highly esteemed – Senate colleagues. To say the issue involved a big wrestling match between the House and Senate is to seriously understate matters. It’s a great story, worth telling at some point. For now, though, (if the determination is made that we need increased revenues), I think the tax on unprepared food could go back up, unless Gov. Herbert and the House fight hard to keep it off. (It is interesting to note, though, that the legislative father of reducing the food tax was President Waddoups – though he and I are seriously outnumbered on this one in the Senate).
An alternative strategy – and, in my opinion, a better one – is to work to not raise taxes at all (though I have to exclude the tobacco tax, where I think it is a fait accompli). I am proud that Governor Herbert seems to be adopting this approach. I’m very proud. I’d be damn proud, if this weren’t a family-friendly blog. We don’t need to raise taxes. The task is to match revenues and expenditures. It’s too easy for Government to look to the revenue side of the ledger, without seriously addressing the expenditure side. If Gov. Herbert is saying that he is against raising taxes – and, more importantly, if his proposed budget then matches that statement – that means that he is willing to take a hard look at state expenditures. That would be tremendously healthy for Utah.
A reality of government – sad but very true – is that expenditures aren’t watched closely enough during “up” years. (Utah does better than most states, but we still have room to improve). If expenditures then aren’t reined in during “down” years, the government-as-servant/citizen-as-master relationship is turned on its head. The “needs” of government become a significant burden on the people (e.g., California and the federal government).
Most of my constituents are tightening their belts. They should expect their government to do the same. If Gov. Herbert is with us, meaning we only need 38 House votes and 15 Senate votes, instead of veto-override numbers of 50 and 20 respectively, we can bring expenditures in line with revenues. If we do that, Utah will be well-positioned for an excellent recovery.
posted by steve u. at 8/28/2009
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11 Comments:
How do we compare tax rate wise against other states?
So long as their is any tax at all their will be people who say their taxed to much, Would be nice to be able to put the tax burden into an understandable perspective somehow.
C'mon, Steve, drunk driving? It's a problem, yeah, but it creates such a cost burden on the state that it justifies raising the alcohol tax, which will then raise the prices of every restaurant out there?
Brilliant!
Eventually, the Lege is going to have to grow up, acknowledge that they can't cut much more, and they are back-filling the budget as much as possible with "fees increases" which are assuredly not the same as "tax increases" (except they are).
I'm optimistic we can slide through this one with relative ease with a few minor adjustments and cuts, so on that we agree, but your defense of raising these "sin taxes" is a bit weak. You guys will raise "sin taxes" because that is the only tax you dare raise, besides those you can call a "fee increase."
RD,
When I entered the Legislature in 2001, Utah's tax burden (taxes and fees) was within the 10 highest among states. That's an economy killer. With our tax cuts of 2005/06, we scooted back to around 20.
The states that tend to do best with their tax rates are the oil producing states. That's a reason why you hear us get exercised over the Obama Administration's efforts to shut down our oil and gas production.
Can I get everyone in the Senate to repeat after me, "Any tax on food is immoral".
I understand that it is a fairly stable tax base which makes it attractive target, but it really does hurt those that can't afford it the most.
The state could have allowed the Energy solutions site to expand more by allowing the storage of spent fuel rods, That alone would draw in more then a Billion dollars per year.
We already store a huge amount of the Military's radioactive waste without any issues(without any return $$).
Yea I know nuclear waste is a contentious issue, But it's also a very very profitable issue for Utah if it was seriously looked at.
Regarding Medicaid, DOH staff report that the state spends approximately $20M on any and all health treatments that might have any likely relationship with smoking. Also, the state collects over $50M in tobacco taxes, which more that covers the $20M and then some.
Here are three tax gripes:
3.) Removing the additional exemptions for families of handicapped individuals was reprehensible.
2.) As predicted, the flat tax has been a tax hike on the middle class. Personally, I haven't seen a single middle class taxpayer's income taxes lowered between the 2007 and the 2009 filing season. Personally, my state income tax liability has quadrupled while my income decreased slightly between 2007 and 2008.
And my number 1 biggest gripe:
The Utah State Tax Commission needs to have its taxpayer services policies completely overhauled. Settlement and collections policies are so vague to non-existent that settling a tax liability with the state hinges more on the mood of the state employee and far less on the validity of the offer in compromise of tax debts. With the federal government I usually know with a 80-90% whether an offer in compromise is going to be accepted. With the USTC, I almost feel I need to resort to gratuities (which state employees can't accept) because they are so unclear on what is an acceptable offer in compromise for tax liens. They never respect taxpayers right to representation by ignoring valid powers of attorney, and overall the organization is dreadful to deal with.
FIX USTC TAXPAYER SERVICES!
Seriously, the tax commission sucks! I would be glad to join any effort to fix such a broken and inept state agency.
Let me get this one, Steve.
RD? No. Now shut up we're talking taxes.
Steve, I'm going to assume you ignored my comment above because I was right on the money (I already knew I was, but thanks for the encouragement anyway).
Now let's talk about this oil and gas drilling foolishness you've followed it up with.
I was going to ask "so you guys have cut taxes so well over the past 10 years, and instituted a flat tax that was going to help out the middle class... what went wrong and why are we having to make cuts, and in 2010 dip into this magical rainey day fund? Why did we cash such a large portion of the Stimulus checks you local GOPers hates oh so much?"
But I guess I have my answer... that mean old Obama is blocking your drilling leases.
The only problem with this, of course, is that our current financial situation could not possibly, in even the most remote stretch of the economic imagination, be the responsibility of a President who has been in office less than a year.
So let's try that again with a more intelligent answer, eh? Because really, I'm curious.
My question still stands, When we talk about tax's we are really just talking about one possible source of revenue for the state. I have not asked anything inappropriate from the context of this conversation.
Pramahaphil,
Your comments are disturbing / motivating. They don't paint a picture of the State I think I'm helping govern or the policies I thought I helped enact. I am going to send your comments to the co-chairs of the rev and tax interim committee, and ask them to look into this. If you want to talk with me offline with more details, please contact me at surquhart@utahsenate.org.
Jason The,
I appreciate everyone who comments, though I don't respond to every comment. I passed over yours, thinking it was intended more as a vent than a comment for response. But, quickly to your points. The Legislature does not believe that alcohol or cigarette taxes equal the societal costs (as Rep. Dougall points out); that's why I used the word "correlate". You are correct; fees are often used in place of taxes. I disagree with your assessment that the State will slide through this next session with relative ease with a few minor adjustments and cuts. This will be a very difficult year, requiring serious discussions about reducing expenditures, raising revenues, or some mix of the two. As to the oil and gas points you raise later, oil and gas producing states are doing quite well; we would be doing much better, were we still producing.
RD,
It's not feasible (nor, I'd say desirable) to move all the rock art -- too costly to remove, too costly to warehouse, and we'd ruin most of its archaeological and historical value by removing it from the location. Utah has outstanding archaeological treasures. We need to be diligent about caretaking these for the future. At the same time, as you point out, we need to encourage economically productive activity. By fits and starts, I think we're learning better how to do this, moving more toward a middle ground where both interests can proceed. I look back over the 25 years or so that I've been closely following environmental issues, and, in many cases, the people increasingly seem to be forcing the dialogue -- and the combatants -- toward the middle. If oil and gas prices head where I suspect they will, this administration will be forced to move the dialogue somewhere beyond "no."
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