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Income tax cut? Eliminate the tax on groceries? Lawmakers look at options

Posted at 3:52 PM, Jan 12, 2022
and last updated 2022-01-12 19:22:34-05

SALT LAKE CITY — At the Utah Taxpayers Association's annual legislative outlook conference, lawmakers stood up and touted their tax cut ideas.

Legislators are filing a number of proposals to cut the income tax rate, eliminate the sales tax on food, expand social security eligibility and other measures. It's because the state is flush with cash from federal COVID-19 stimulus dollars and record-breaking revenues.

"We’ve seen year after year after year more revenue coming to the state of Utah per capita," said House Speaker Brad Wilson, R-Kaysville.

Headed into an election year, lawmakers have felt pressure to give a tax cut.

"We’ve been advocating since the spring for a large income tax rate cut. We think there’s plenty of revenue to do it," said Rusty Cannon, the president of the Utah Taxpayers Association.

At least three bills have been proposed to chop the income tax down. Senate Majority Leader Evan Vickers, R-Cedar City, has proposed lowering the state income tax rate from 4.95% to 4.9%; Rep. Travis Seegmiller, R-St. George, has proposed dropping it to 4.75%; and Sen. Dan McCay, R-Riverton, has proposed generously reducing it to 4.6%.

Sen. McCay told FOX 13 that lawmakers may land somewhere in the middle.

"I’m just excited to honestly be talking about how we get more Utahns tax money back to them," he said.

Senate President J. Stuart Adams, R-Layton, said it will be a healthy debate in the 45-day legislative session.

"We’ll have that debate but right now we’ve set aside $160 million dollars. That’s a minimum of what we’ll probably do. We actually may do more," he told FOX 13.

Another tax proposal would eliminate the state portion of the sales tax on groceries. Rep. Rosemary Lesser, D-Ogden, has said she will sponsor a bill for the all-out elimination (preserving a local sales tax option) with the support of advocates for lower-income Utahns.

"My bill would eliminate the tax, state’s portion, at the register. Not waiting for a credit," she said.

The Utah Taxpayers Association said it does not favor a grocery tax repeal, preferring to support the income tax reductions. Governor Spencer Cox's budget included a grocery tax credit for low-income Utahns. It's an idea that has intrigued some advocacy groups, but a number of groups are rallying around Rep. Lesser's bill. If her bill fails, there has been some discussion of a citizen ballot initiative.

Rep. Lesser said she hoped it wouldn't come to that.

"When you come right down to it, ballot initiatives are expensive, are cumbersome and I think as elected representatives, it’s our job to do our job," she said.

There are other tax bills being proposed, including Senate Minority Leader Karen Mayne's bill to expand social security tax credit eligibility. Sen. McCay told FOX 13 he was also speaking with Rep. Mike Winder, R-West Valley City, about an earned income tax credit.

"An earned income tax credit at the state level that may help offset some of the concerns there are with just a flat rate reduction," he said.

Speaker Wilson said expect a healthy debate on tax policy.

"We’re going to keep chipping away at that because we believe the best way to help Utahns is to let them keep more of their own money and spend it and use it the way that they want," he said.