Do tax incentives given to businesses benefit Utah’s economy? A bill flying through the Utah Legislature seeks an independent analysis to find the answer.
HJR12 would direct the Utah Tax Review Commission to study the positive and negative effects of tax incentives and recommend whether a general tax rate cut for all taxpayers would provide more benefit to the economy than these targeted breaks.
Sponsoring Rep. Kay Christofferson, R-Lehi, told The Tribune in an interview that Utah’s tax-incentive system has been a concern for him for a number of years. One question he’s wondered about is whether the state is rewarding companies to come into the state only to “compete” with businesses who are “already here” and receive no such tax breaks.
Government should “level the playing field” so that everybody can “have an equal shot," Christofferson said. He believes that lowering general tax rates would accomplish this instead of using targeted incentives that essentially allow the government to "put a finger on the scale” and decide who “should play in that field.”
One recent example of the use of incentives was a deal worth $5.6 million awarded to e-commerce giant Amazon in 2017 to open up a fulfillment center — essentially a distribution warehouse — in Salt Lake City. The incentive package guarantees 130 high-paying jobs but 1,000 more jobs will be at or below the area average wage. And some questioned whether Amazon would have built the facility anyway as part of its strategy of regional fulfillment centers.
Apparently, Christofferson’s colleagues agree the issue deserves scrutiny.
HJR12, co-sponsored by Sen. Lincoln Fillmore, R-South Jordan, has cleared most of its legislative hurdles without a single dissenting vote from either side of the aisle. The House-approved resolution cleared its preliminary test in the Senate on Friday on a vote of 27-0. It has been tabled for the time being because of its $19,000 price tag to pay staff and related expenses for the Tax Review Commission to conduct the analysis.
The commission is a bipartisan body composed of 16 members and appointed by the state’s Legislature and governor. It can be directed to review any aspect of the tax system though a joint resolution.
