The argument that the chronic underfunding of Utah schools could be at least partially remedied by increasing the tax burden on Utah’s many large families has been batted about for years.
Some see the state’s habit of giving more income tax breaks to the same households that put the most strain on the public school system as perverse. Especially when, by the Utah Constitution, income tax revenue is dedicated to education.
Such a bill would sometimes be floated in the Legislature, but it never went very far. Not in family-friendly Utah.
Well, guess what. A recent change in tax law means that Utah families that had previously been able to reduce their tax liability by claiming deductions for each child will now lose that advantage. The cost to individual households, depending on their size and income, could be nothing, a few hundred dollars or as much as $1,000.
And it all happened without the Utah Legislature doing a thing.
Which — even if you like large families paying more taxes for the schools they fill — is not a good way to make tax policy.
The changes are a result of the new federal tax bill, which balanced a much larger standard deduction for households by removing the individual deductions for dependents. Many families, in Utah and elsewhere, will find themselves coming out ahead on their IRS Form 1040.
But as Utah, like many other states, ties its tax calculations to specific parts of the federal tax code, the loss of individual federal dependent deductions means a smaller family break on state taxes. And thus more taxes paid to Utah.
Don’t expect your member of the Legislature to fess up about that. What our lawmakers are hoping you notice — though most of us probably won’t — is the tiny cut in the state’s flat income tax rate. It will go from 5 percent to 4.95 percent, saving most families a pittance and giving the greatest benefit to the highest earners.
Some members of the Legislature did see this train coming, and at least one bill was introduced that would have headed off the accidental tax windfall. But that bill never made it out of committee.
After all of that, the state expects the federal tax changes to bring the state an additional $80 million a year, while Utah loses only $55 million from its own tax cut.
So. The Legislature cut your taxes but doesn’t have to work to fill the gap in state coffers due to a tax hike enacted by someone else.
Wonderful politics. Bad policy.
