Troubling tax proposals

The trouble with tax reform is the inevitable shift of tax burdens.

Take some of the proposals of a subcommittee of the Utah Legislature's Tax Reform Task Force. It proposes giving Utah business a $200 million tax cut. But it would saddle consumers with $150 million more in new sales taxes — on services. If you're slapped with nuisance lawsuit, be prepared to pay taxes on top of your legal fees. Want a new look? Your haircut would be taxable under this proposal. Even the services of accountants — who will be needed to figure out any new tax scheme adopted by the Utah Legislature — would be taxed. Eradicating killer bees would come with the sting of taxes. Even your Deseret Morning News subscription would be fair game for taxation under this proposal.

It's notable that the the subcommittee drew the line at doctor and hospital bills and prescription drugs, which is probably a good thing since many of these onerous proposals are the stuff of serious headaches and bellyaches. Frankly, a tax on health care would have been an insult added to injury, so to speak, so it's good that the subcommittee used some constraint in that area.

But the Legislature needs to tread lightly in many areas of this proposal. Although a lot of revenue could be garnered by taxing services, some experts say the approach can backfire because it could encourage the development of black markets for services. Service providers may insist upon being paid in cash, which would make it very difficult for tax auditors to track people who aren't complying with the law.

Particularly troubling for the freedom of press is a proposal to tax newspaper sales. The tradition of exempting newspapers from sales taxes is rooted in sound public policy and based on the Constitution. A free society demands information that is easily available, unfettered and unencumbered by government constraints.

A sales tax on newspapers would be particularly onerous on the state's smallest newspapers, which provide an invaluable service to the communities they serve. They, and their subscribers, would bear the brunt of any new tax on subscriptions. Some newspapers may be forced to raise advertising rates. Ironically, that would impact local governments, which are required to publish legal notices.

While it might appear self-serving, people who work on the editorial side of newspaper operations don't stay awake nights fretting over the bottom line. (Here, as in other news organizations, business professionals do that.) Reporters go into journalism because they highly value the First Amendment. They understand the importance of keeping the public informed, which enables them to make better decisions and be engaged in their communities. Anything that hampers the people's right to receive information about their government is an affront.

It's our understanding that the Tax Reform Task Force is a work in progress. We trust the full panel will take the time to reconsider the fallout of these proposal and consider other options that more evenly spread the tax burden.