Tax and Budget

Beginning this Summer 2021, Utah Local Education Agencies (LEAs) will be receiving approximately $615 million in Elementary and Secondary School Emergency Relief Funds (ESSER) funds from the American Rescue Plan. Now is the time to use this funding to help our youngest learners that will need the additional instruction and interventions now more than ever.

In this explainer, Voice's staff Anna Thomas and Laneta Fitisemanu will cover the ESSER funding Utah is set to receive as well as ways that we can use the funds and support full day kindergarten and preschool expansion. 

We have exactly two school years (2021-22, 2022-23) and three summers (2021, 2022, 2023) to spend these funds. It is critical that we think big picture about where we invest this money when it comes to education.

We have strong data and evidence supporting that full day kindergarten and preschool programs help improve learning gaps for children that participate particularly for our most vulnerable and underrepresented student groups. This is why using ESSER funds to help expand these much wanted and needed programs is critical and one of the most important investments we can make that will have a huge impact for years to come.

Let's invest in Utah kids by using this relief funding to expand early education programs and further support the value and importance of giving more of Utah children and families access to full day kindergarten and preschool programs! 

Resources and References

Published in News & Blog
February 22, 2021

Tax Cut Survey Results

Voices for Utah Children Releases Tax Cut Survey Results:

90% Support Investing In Utah Kids Rather Than Tax Cuts

Salt Lake City -- Today, February 23, 2021, Voices for Utah Children released the current results of our Tax Cut Survey.

The Tax Cut Survey is an online survey open to the public and posted at https://utahchildren.org/newsroom/speaking-of-kids-blog/item/1112-tax-cut-survey. The survey has been advertised to hundreds of thousands of Utahns through ads in the Deseret News and Salt Lake Tribune that included graphics like this one: 

 Tax Survey 300x250 Laneta

THE RESULTS.... (drum roll please....)

So far, hundreds of Utahns from all over the state have participated in the survey, which consists of two questions: 

1.When it comes to tax cuts, is your overall opinion closer to A or B (select one)

A. We should invest in Utah kids -- their education, healthcare, and other critical needs -- rather than tax cuts, especially in light of the fact that Utah's taxes are already at a 50-year low.

B,   We should continue cutting taxes because state government has more than enough resources to accomplish what it needs to accomplish. 

90% of survey participants chose A, and 10% chose B, as illustrated in the following pie chart graphic:

TaxCutSurvey90 10chart

In question 2, the survey asked: "How would you rank the following seven possible tax cuts?"

Participants ranked the seven options as follows, in order from most popular to least popular:

1) One-time Utah tax rebates for low incomes ($200/person)

2) Utah EITC -- a state match for the federal Earned Income Tax Credit for low and moderate incomes

3) One-time Utah tax rebates for low and moderate incomes ($100/person)

4) Military pension and Social Security tax credit for low-income retirees

5) Child tax exemption expansion for middle- and upper-income families with children

6) Military pension and Social Security tax credit for high-income retirees

7) Income tax rate reduction (mostly benefits high-income households)

The survey webpage also includes a detailed description of each of the proposals, including bill numbers for some of the items.

WHAT DO THESE RESULTS MEAN?

The response to the first question -- a strong public disinclination to support tax cuts -- is consistent with three surveys done in 2020 -- all of which were rigorous public opinion surveys intended to accurately reflect the views of Utahns in all their diversity, unlike this open, online survey. Those three surveys last year were conducted by the Deseret News and Hinckley Institute, by the Utah Foundation, and by Envision Utah, and they all found a similar strong popular preference for public investment over tax cuts. A new survey this month by the Deseret News and Hinckley Institute also found majority support for investing in Utah's future rather than cutting taxes. 

The response to the second question -- a clear inclination to favor tax cuts for lower-income Utahns over tax cuts for upper-income Utahns -- runs counter to the plans outlined by Legislative leaders this week to pass tax cuts that mostly benefit upper income Utahns and exclude lower-income Utahns from tax relief. A detailed analysis of two of those proposals is on the Voices for Utah Children website.

Survey participants were offered the opportunity to share their location and any additional thoughts, and here are some of the comments that were left:

  • A survey participant from Clearfield commented, "I love EITC. It helps those who need it most and rewards people for working. If this passes, I would really like to see more singles and older couples who are not currently included in federal EITC included. This may be a targeted way to help low-income seniors."
  • A survey participant from Mt. Pleasant commented, "I am a US Army Reserve retiree. Every year the State of Utah gouges me for more than the feds Give the military, especially the lower income USAR retirees a tax break."
  • A survey participant from Sandy commented, "We need to invest in getting people out of poverty!"
  • A survey participant from Millcreek commented, "My # 1 would be removing the sales tax on food completely."
  • A survey participant from Pleasant Grove commented, "invest in services and affordable starter homes; it's a Pandemic! and the need is so great for Utah families with low to mid incomes."
  • A survey participant from West Jordan commented, "I believe we need to leave the taxes alone for now and take care of our low income citizens.  Our DSPD [disability services] waitlist is shameful and individuals are waiting for services."
  • A survey participant from Midvale commented, "I'm okay with paying my taxes. If you want to look at a place where people don't pay enough taxes, look at India. Look at Russia, look at Mexico. Let's make sure that money collected by the government is being spent on families, education, healthcare and keeping our cities and towns running efficiently and effectively for EVERYONE. We know that trickledown economics has a limited effect and let's not let the highest earners amongst us allow themselves to imagine that somehow the proportion of what they are able to take from the system should be greater than what they need to pay into the system - like the rest of us."
  • A survey participant from Brigham City commented, "Tax the rich people MORE!!!"
  • A survey participant from Sandy commented, "We don't need a tax cut. We need to increase taxes specifically to provide additional help to low income families, especially children in low income families, and especially those at or below the poverty line."
  • A survey participant from Provo commented, "Successful business people invest in their businesses. Successful citizens invest in their children"
  • A survey participant from Sandy commented, "I am single income, no kids (SINK) and my taxes are awful.  However, I definitely want to help low income families."
  • A survey participant from Spanish Fork commented, "Eliminate taxes on Social security benefits."
  • A survey participant from Farmington commented, "I do not favor reinstating sales tax on food."
  • A survey participant from Holladay commented, "tax rebates are stupid, one-time cash gifts when SO MANY public sectors dealing with education and the homeless need to be funded!"

Voices for Utah Children's Fiscal Policy Director Matthew Weinstein commented, "Political leaders are calling for tax cuts, but average Utahns are not. Utahns see the state of our schools and the unmet needs in so many areas of public responsibility. Utahns want to see our leaders solve those problems, especially as we continue to grapple with all the challenges of the COVID pandemic and recession."

The survey remains open through the end of the legislative session on March 5. All Utahns are invited to express their views at https://utahchildren.org/newsroom/speaking-of-kids-blog/item/1112-tax-cut-survey.

In addition, Utahns who want to write their legislators about this issue are invited to make use of our customizable form letter by clicking here

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January 31, 2021

Tax Cut Survey






 Detailed description of the 7 tax cut options in the survey above: 

Tax Cut OptionsHow big is it?Who Benefits?Status in 2021 Legislature and Additional Comments
A one-time Utah tax rebate to low-income households -- $200 per person (including both adults and children) for the fifth of households earning under $30,000$80 millionThis would be a state version of the $1200 tax rebates in the March 2020 federal CARES Act, targeted to the lowest-income one-fifth of households.
Utah tax rebates to low- and moderate-income households -- $100 per person (including both adults and children) for the two-fifths of households earning under $50,000$80 millionThis would be a state version of the $1200 tax rebates in the March 2020 federal CARES Act, targeted to the lowest-income two-fifth of households.
“Utah EITC” -- A state version of the popular federal refundable earned income tax credit (EITC) for lower-income working Utahns. The state version would be equal to 10% of the federal EITCAbout $300 per family. Total = $50m if it's accessible for all Utah EITC recipients or $7m if it's just for Utahns working their way out of intergenerational poverty (IGP).Full EITC population is 170,000 Utah households earning less than $50,000, most with kids. The IGP population is about 22,000 households.29 other states have a state EITC. The IGP EITC is HB 309 this year and was passed in December 2019 as part of the ill-fated tax restructuring law that was repealed.
Military retirement and Social Security tax credits targeted to high-income retirees (non-refundable*)MIlitary pension tax credit: $24 million total, $1300 per household. Social Security tax credit: $18 million total, $300 per household70% of this Social Security tax credit and 90% of this military pension tax credit goes to high-income retirees. None goes to low- or moderate-income retirees since they already have no state income tax liability. See https://utahchildren.org/newsroom/speaking-of-kids-blog/item/1111-analysis-of-retirement-tax-credit-proposals for more details.This is the proposal in SB11, which passed the Utah Senate in the first week of the 2021 legislative session.
Military retirement and Social Security tax credits targeted to low- and moderate-income retirees (refundable*)Same total as above, but the amount per household would be lower for the military pension credit and it would reach more households.Only for low- and moderate-income military retirees earning less than $50,000
Child tax exemption expansion for families to offset the impact of the 2017 federal tax changes (nonrefundable*)$78m tax cut for families with children, offset by a $40m increase for higher-income taxpayers with no dependentsAs a nonrefundable change, this exemption expansion mostly benefits higher-income taxpayers with children. None of it goes to the lowest-earning 30% of taxpayers.This is the proposal embodied this session in SB 100.
Income tax rate reduction -- from 4.95% to 4.75%$200 millionIncome tax rate reductions mostly benefit Utahns with six-figure incomes. The income tax is Utah’s only non-regressive tax, the only one that lines up with the state’s income distribution. That means that 3/5 is paid by the top 1/5, and 4/5 is paid by the top 2/5. The lowest-earning 3/5 of Utahns (those earning less than about $75,000) pay very little of the state income tax.This is the proposal from the Utah Taxpayers Association

 * Refundable means that it’s like the federal EITC – you get the credit even if it’s larger than what you owe on your income taxes, in which case you get a rebate. Non-refundable means that you only get it to the extent that you owe something, so no rebate is involved.

*********************************

At the end of the month we published the results from the hundreds of Utahns who took the survey -- see those at our Tax Cut Survey Results page.

 

 

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The Utah Legislature is considering including $40-$50 million of retiree tax credits in a package of tax cuts this session.  But an important question has arisen as to whether these credits are actually designed properly to help the people that the sponsors say they want to help.

Social Security Tax Credits: SB 11 and HB 86

In his proposed FY22 budget, Governor Spencer Cox wrote that he would like to see "a social security tax credit for low- and middle-income seniors." In the first week of the legislative session, the Utah Senate passed SB 11, including what legislators have described as a Social Security tax credit for low- and middle-income seniors. 

The devil is always in the details with tax legislation.  Unfortunately, a close examination of the details of the Social Security tax credit included in both SB 11 and HB 86, as those two bills are currently drafted, reveals that they fail to achieve their stated objective of providing a tax credit for low- and middle-income seniors.  

According to data from the Office of Legislative Fiscal Analyst, none of the proposed Social Security tax credit goes to low-income seniors (0%).  Almost none goes to moderate income seniors (2%).  About a quarter of it goes to middle-income seniors (27%). But the overwhelming majority of this $18 million tax credit -- over 70% -- goes to the top two-fifths of Utah seniors, those with incomes above $90,000 annually.  The chart below from Voices for Utah Children's January 28th presentation before the House Revenue and Taxation Committee  illustrates who this tax credit is targeted to in its current form by dividing Utah households into quintiles or fifths: 

 SB11 SS credit chart

To better understand how this legislation works, the chart below shows how the credit would be calculated for two eligible households: 

SB11 SS credit scenarios

This chart illustrates how the very long phase-out range makes the credit available mostly to upper-income households. The other fault with the bill is that it is not refundable, which means it's not available to lower-income seniors with no state income tax liability, which is likely to include most Utah Social Security recipients. It is certainly good news that our existing tax structures already shield low- and moderate-income seniors from having to pay Utah income tax on their Social Security income, thanks to the Utah Taxpayer Tax Credit and the federal government's treatment of most Social Security income as non-taxable for low-income households. Thus, this credit would need to be refundable in order to help low- and moderate-income Utah seniors by offsetting some of the other taxes they pay, such as property, sales, and gas taxes. 

And, indeed, low- and moderate-income seniors need such assistance. The federal government's official poverty rate for seniors (6.2% or 22,500 seniors, vs. 8.9% for Utah overall & 9.9% for children in 2019) actually understates elderly poverty by roughly 50%, according to the Census Bureau's own Supplemental Poverty Measure. Fully one-fifth of senior couples and nearly half of single seniors have only their Social Security to live on. They could use a tax break. It is very unfortunate that SB 11 and HB 86 do virtually nothing for them, all the more so given the statements from those bills' sponsors and proponents that helping low-income seniors is a central purpose of the bills. In addition, the loss of $18 million of revenue from this tax break that mostly benefits upper-income households will make it harder for the state to provide vital services to seniors in need. 

Military Retirement Tax Credit: SB 11 and HB 161

If the Social Security tax credit offers a fairly stark contrast between stated intent and actual effect, the proposed military retiree tax credit in SB 11 is even more jarring. While this proposed credit shares with the proposed Social Security tax credit that it helps virtually no one in the lowest-income two fifths of Utah retirees, it holds the distinction of being far more skewed toward the top of the income scale. Less than a tenth of it goes to middle-income seniors. Over 90% of this proposed credit goes to retirees in the top two-fifths of the income distribution, most of them with six-figure household incomes. The chart below illustrates this in detail, based on data from the Legislature: 

 SB11 military credit chart

It is projected that recipients of the tax credit in SB 11 will each receive a credit averaging $1300 annually. This credit will leave Utah with $23 million less each year to invest in education, public health, infrastructure, clean air, or any of the myriad of critically important yet underfunded priorities on Utah's list. Needless to say, that list includes helping Utah's thousands of homeless veterans who, having returned from serving their country, should not find that their state or the nation has any higher priority than helping them get back on their feet.

Thus, while we understand the widespread sentiment that, as a matter of principle, military pensions should never be taxed, we hope that, as a practical matter, policymakers will consider the fact that current state tax law already effectively shields military pensions from the state income tax for low-, moderate, and most middle-income retirees as they prioritize among the various tax cut proposals that they are considering. 

Voices for Utah Children's Tax Policy Priorities 

In all of the tax policy work in which Voices for Utah Children engages, we pursue two priorities that serve our guiding principle that Utah should be a state where all children have the opportunity to achieve their full potential: 

1) Revenue sufficiency: Utah's tax system needs to generate sufficient resources to finance the critically important investments that lay the foundations for the success and prosperity of Utah's next generation, including education, public health, infrastructure, air quality, and other basic needs. While we understand that paying taxes is never politically popular, we are very concerned that the deep tax cutting of the last 25 years, amounting to $2.5 billion annually not available to state and local government budgets and which has left Utah at a 50-year low for our overall level of taxation, has hamstrung Utah's ability to prepare the next generation to meet the challenges they will face. 

2) Tax fairness: Utah's overall tax structure, while improved compared to 25 years ago, remains regressive overall. The highest-income Utahns still pay a lower overall tax rate than low- and middle-income Utahns. In addition, Utah taxes about 100,000 households into or deeper into poverty every year, including a disproportionate share of Utahns of color who already face numerous disparities and obstacles as they endeavor to raise their children and achieve the American dream. To alleviate these inequities, Voices for Utah Children supports policies like the Earned Income Tax Credit (EITC) that enable more Utahns to work their way out of poverty. 

 MEDIA COVERAGE OF THIS ANALYSIS: 

 

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Snow on the mountains, inversions in the valleys, and talk of tax cuts at the Capitol: It must be January in Utah.

Reports are accumulating that the state’s political leaders are looking to make 2021 “the year of the tax cut.” But, as always with taxes, the devil is in the details. What taxes would be cut, and for whom? And how would the revenue losses affect Utah’s children in the long term?

The Utah Taxpayers Association is proposing a cut in the income tax rate, which means the benefit goes overwhelmingly to the top of the income scale. Utah’s income tax is our only tax that is not a regressive tax. It’s the only one that actually reflects Utah’s income distribution. Three-fifths of all Utah income is earned by the top one-fifth of taxpayers (perhaps these are the taxpayers that the Association speaks for), and three-fifths of the income tax is paid by that same top one-fifth of taxpayers. Four-fifths of it is paid by the top two-fifths.

Cutting the income tax rate is a tax cut for those who don’t need one. It’s a tax cut for those among us who thrived over the last year despite the pandemic and recession -- and are, by all accounts, ready, willing, and able to do their part to help their fellow Utahns who were not so fortunate.

Because the truth is that not all Utahns are in a great spot right now. Poverty and unemployment remain elevated. Hunger has increased. Homeless shelters are full and encampments large and small have appeared all along the Wasatch Front. Nearly half of Utah parents lost income last year, and a third feared eviction or foreclosure as a result, according to the U.S. Census Bureau’s Household Pulse Survey.

And for all these indicators of distress, the disparities between different ethnic and racial groups are stark. For example, the Census surveys found that Latino Utah parents were 10-23 percentage points more likely to have lost income than White Utah parents, and 2-3 times as likely to not have enough food to eat.

The Census surveys also found a digital divide, with about a tenth of Utah children lacking consistent access at home to internet or to a digital device for educational purposes.

Health indicators tell a similar story. Between 2016 and 2019, even before the arrival of the coronavirus pandemic, our rate of uninsured children increased from 6% to 8.3%, from 59,000 to 82,000. We now rank among the worst in the nation, 46th place, when it comes to insuring our kids – and last in the nation for insuring Hispanic children for the third year in a row.

Certainly refundable tax credits like a Utah Earned Income Tax Credit (EITC) targeted to those in greatest need should be part of our response to the economic distress brought about by the pandemic. But tax cuts for middle- and upper-income Utahns would reduce our ability to make the investments in Utah’s future that are the key to our children’s prosperity and success.

The Taxpayers Association’s argument that “tax relief for Utah taxpayers is long overdue” ignores the reality that “Utah taxes are relatively low — lower now than in many years,” as Zions Bank CEO Scott Anderson wrote a year ago in the Deseret News. Data from the Utah State Tax Commission finds that our overall level of taxation is at a 50-year low, following repeated rounds of tax cutting. Voices for Utah Children has found that these tax cuts have reduced annual revenue by 18% over the last 25 years, adding up to an annual total of $2.4 billion.

Last year at this time, a broad and diverse coalition of Utah advocates for the poor, for persons with disabilities, for education, health care, clean air, and for a variety of other popular Utah priorities came together on the steps of the Utah Capitol calling on the Utah Legislature to avoid cutting taxes until it developed a comprehensive plan to address Utahns’ top concerns by investing in Utah’s future.

Last year at this time, Utah policymakers wisely concluded that the economic outlook was too uncertain to take a risk with tax cuts. We know the state’s political leadership wants what is best for Utah. Is the outlook for 2021 truly so certain that we can now give in to the tax cut temptation? Would this be the fiscal prudence for which Utah has been so widely recognized nationally?

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