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Income tax cut passes Senate committee, bill to eliminate sales tax on food may be dead

Posted at 4:13 PM, Jan 26, 2022
and last updated 2022-01-26 19:48:21-05

SALT LAKE CITY — A Senate committee voted 6-2 to pass a bill that lowers the income tax rate by a percentage point.

Flush with extra money, Republican leaders in the Utah State Legislature are promoting an income tax cut. FOX 13 first reported last year legislative leaders were going to push for one.

On Wednesday, the Senate Revenue and Taxation Committee passed Senate Bill 59, which lowers the rate from 4.95% to 4.85%. It passed along party lines with Democrats voting against it.

"We can take some of that money and return it to the taxpayers," said Sen. Dan McCay, the bill's sponsor.

For an average family of four making $72,000? It's about $98 back each year. If a family of four makes $40,000? It's about $45.

"It’s not a big number, but it does make a difference to those who earn that income. That’s one more expense, a few more meals," he told the committee.

But some think the Utah State Legislature can do better. Public comment from taxpayer advocacy groups and activists argued the legislature can go lower in the income tax rate. Others said the legislature should offer no tax cut and instead spend it on more pressing social service needs.

Speaking to reporters on Wednesday, Senate GOP leaders signaled that the rate might go lower when the bill makes its way to the House of Representatives. The 4.85% rate may just be a starting point in budget negotiations on Capitol Hill.

But leaders in both parties cautioned about going too low.

"We’re trying to balance fiscally, being careful and conservative and also some return to our taxpayers and in addition to that, funding some high priorities," said Senate Majority Whip Ann Millner, R-Ogden. "We want education, we’re concerned about water."

Senate Minority Whip Luz Escamilla, D-Salt Lake City, warned of having to slash vital government programs if an economic bubble bursts.

"Let’s be clear that money is probably not going to be there next year and the following year so we need to be cautious and not jump and really end up in a situation where we’re going to be cutting programs and services," she said.

Lawmakers have hinted at other tax cuts coming, including doing more with Social Security. There is also discussion about an earned income tax credit for some of Utah's most needy. Advocates for lower-income Utahns have been rallying people to pressure lawmakers to pass a bill to eliminate the state portion of the sales tax on food. The Crossroads Urban Center recently launched an online campaign of people writing on paper plates their demands for the bill to pass.

Governor Spencer Cox has pushed for a grocery tax credit to help those in need. But neither idea seems to be going anywhere in the legislature. When FOX 13 asked Senate leaders about it on Wednesday, it appeared Republican leaders were not going to support them.

"I have to admit, neither body seems to be to energized on it," said Senate Majority Leader Evan Vickers, R-Cedar City. "I know the Democrats are very energized on it, Republicans are not."

Added Senate President J. Stuart Adams, R-Layton: "The governor has been talking about an earned income tax, we’re having those discussions."