2022 tax cuts: Utah legislature set to approve $200 million cut

Utah lawmakers have moved a step closer to approving a nearly $200 million tax cut this year, including a general income tax rate cut of $160 million. dollars, a $25 million non-refundable earned income tax credit, and a $15 million expansion for state Social Security. tax credit.

The Utah House on Wednesday voted 63 to 12 to approve SB59, a bill the Senate approved earlier in the session that included only provisions to raise the income tax rate of the Utah from 4.95% to 4.85%. House lawmakers added the earned income tax credit and Social Security tax cuts to the bill during a committee last week, seeking to offer more “targeted” tax cuts. to low- and moderate-income Utahns.

The bill now returns to the Senate for consideration. It could be debated there as early as Thursday.

The tax cut bill has passed the House, with several Republican lawmakers applauding the inclusion of what would be a first for the state of Utah – a non-refundable earned income tax credit. They said it would better target Utahns at the lower end of the income scale while encouraging work.

“It’s the principle of no donations,” the bill’s house sponsor, Rep. Casey Snider, R-Paradise, said on the floor of the house. “An individual must contribute to society if he expects something to come back to him.”

“It’s a good bill,” Snider said, though he added that he “doesn’t like every element of it with uniformity.” He said the bill was drafted from a compromise and not everyone was entirely happy with its final product.

“But what we’ve designed here is fair, equitable, spans all income brackets, and makes everyone equally happy and unhappy,” he said.

What does the tax reduction include?

Here’s what’s in SB59:

• As currently drafted, SB59 would increase Utah’s income tax rate from 4.95% to 4.85%. The impact on Utahans would depend proportionally on income levels, but for a family of four earning $72,000 a year, the reduction would mean about $98 more a year.
• The non-refundable earned income tax credit would provide additional relief to low- and middle-income Utah workers by allowing them to qualify for a state match equal to 15% of the federal tax credit amount on earned income, according to his original invoice HB307. How much they would receive would depend on family size and income levels, but for a family of four with an annual income of $31,000, the state earned income tax credit would give them an additional $266 on their tax return, according to the bill’s sponsor. , Representative Mike Winder, R-West Valley City.
• The bill also absorbed HB53, sponsored by Rep. Walt Brooks, R-St. George, to extend the state Social Security tax credit. That would translate to an average annual tax savings of about $210 for about 71,257 Utahns in the 2022 tax year, according to the bill’s tax note.

House and Senate legislative leaders said the earned income tax credit and Social Security bills are the tax cut proposals GOP caucus members favor the most.

Both bills took shape in closed caucus meetings, with Republicans favoring them as complements to an income tax rate cut — more than Gov. Utahns a tax cut in the form of a $160 million grocery tax credit. , and significantly more than the preference of Democrats and poverty advocates to repeal the state’s share of the food sales tax.

House debate

Some Democrats have tried to amend the bill according to their preferences. Rep. Joel Briscoe, D-Salt Lake City, has tried to change the earned income tax credit from non-refundable to refundable, which he says would allow taxpayers to recoup more.

Stating that the earned income tax credit is non-refundable — non-refundable — ensures that taxpayers only receive what they paid in taxes. If it were refundable, they would be eligible to receive the full amount of the tax credit, regardless of their tax payable.

A refundable working income tax credit would better target working families at the bottom of Utah’s wage scale, Briscoe said. But his proposal failed on a voice vote.

Rep. Rosemary Lesser, D-Ogden, also tried to change the bill to instead repeal the state’s share of sales tax on food — a proposal she and Rep. Judy Weeks Rohner, R-West Valley City, pressed. this year even though legislative leaders have said there has been no support among the GOP majority this year.

Repeal of the state sales tax on food, Lesser argued, would give low-income Utah families “immediate relief,” especially those already living on paycheck to paycheck. the other.

But Lesser’s amendment also failed in a voice vote, as House Republicans — and some House Democrats — favored Snider’s version of the bill.

“I think in this bill we’ve struck the right balance,” said Rep. Robert Spendlove, R-Sandy. “It literally gives a tax break to every taxpayer in the state of Utah.”

In the Senate, Republican legislative leaders told reporters at a news conference after the bill was approved by the House that the bill could be heard as early as Thursday afternoon.

The bill’s sponsor, Sen. Dan McCay, R-Riverton, did not say the Senate is likely to pass the revised bill, adding that he would rather “spend time with my colleagues and make sure everything the world understands what it is about”. However, McCay said he thought there was general support in the Senate for the “concepts and principles” of the House version.

Speaking for themselves, Senate Speaker Stuart Adams, R-Layton and Senate Majority Leader Evan Vickers said they support the House changes to include the non-refundable earned income tax credit. and the expanded social security tax credit.

“We knew the House was going to add some things,” Vickers said. “We allowed them to have the flexibility and the freedom to do that, and we will come back to that when it comes back. But like Rep. McCay, I don’t want to get ahead of everyone else.

McCay chimed in, asking to “correct” something Vickers said. “We didn’t allow the House to have its flexibility, we respect its flexibility.”

Vickers thanked McCay, adding, “We knew the House wanted to make changes, and we were certainly on board with that.”

Contributor: Bridger Beal-Cvetko

Grid view

• Rep. Dan Johnson, R-Logan, greets Sarahy Hernandez, an early language development student at West High School, after her bill, HB230, passed the House of Representatives at the Salt Lake City Capitol on Wednesday February 9, 2022. The bill supports refugee students through the school registration process.
  
  

  Laura Seitz, Deseret News
  

• José Manuel Bautist Adame, an early language development student from West High School, center, smiles as HB230 passes the House of Representatives at the Salt Lake City Capitol on Wednesday, Feb. 9, 2022. The bill supports refugee students while throughout the school enrollment process. Assad moved from Sudan to Utah six years ago.
  
  

  Laura Seitz, Deseret News
  

• José Manuel Bautista Adame, an early language development student from West High School, watches HB230 pass at the Salt Lake City Capitol House of Representatives on Wednesday, Feb. 9, 2022. The bill supports refugee students throughout the school registration process.
  
  

  Laura Seitz, Deseret News
  

• Stephanie Hunt, an early language development teacher at West High School, cheers with her students as HB230 passes through the House of Representatives at the Salt Lake City Capitol on Wednesday, Feb. 9, 2022. The bill supports refugee students throughout the school enrollment process.
  
  

  Laura Seitz, Deseret News
  

• The Salt Lake City Capitol is pictured Wednesday, Feb. 9, 2022.
  
  

  Laura Seitz, Deseret News
  

• A security guard walks past the Senate Chamber at the Capitol in Salt Lake City Wednesday, Feb. 9, 2022. The Senate Business and Labor Committee will consider SR1, a resolution that would limit media access to the Senate.
  
  

  Laura Seitz, Deseret News