2 again to target child tax deduction
Their bill would increase taxes for large Utah families
A dolled-up version of a bill to raise $82 million for public schools, partly by limiting child tax deductions for big families, will return in the 2005 Legislature.
But it's questionable whether the so-called "Jones-Mascaro bill" will turn the heads of lawmakers, who are eyeing a handsome $325 million in new money expected to become available without them doing a thing.
"Individual Income Tax Amendments for Education Funding" is being drafted by Reps. Patricia Jones, D-Cottonwood Heights, and Steve Mascaro, R-West Jordan. It's the bill's third incarnation.
The bill would end child tax deductions after the fifth dependent. That basically means after the third child for a two-parent family, or the fourth child in a single-parent family.
That's a change from last year's bill, which ended child tax deductions after the fourth dependent. Also new: The Utah Tax Review Commission would study fiscal impacts in five years, and recommend whether the law would stay, go, or change.
Like last year's version, the bill would alter state income tax brackets to benefit the poor and require that brackets adjust with inflation. It would let Utahns transfer 5 percent of their federal earned income tax credit to their state taxes, a move benefiting Utahns earning $35,000 a year or less, Mascaro said. And it would eliminate Utahns' ability to deduct from state taxes what they paid in federal taxes.
The child tax deduction, which some term as a "head tax," has taken center stage in public debates. All Utah income tax revenues go toward education. Utahns get tax breaks for having children. The bill challenges whether people without children should pay more to educate them than those with children.
"Responsibility is a family value. (The bill) puts the responsibility where it should be, instead of getting a 'head bonus,' " Jones said. "It gives us positive tax reform, a significant infusion of money in our schools, and it's going to end up in the classroom."
The bill would lower taxes for some, increase them for others. A family of four earning $45,000 the average Utah household would pay $2 less a month in taxes; a family of six earning $35,000 would pay an extra $20.
Jones and Mascaro say polling (done by groups outside Dan Jones & Associates, where Jones works) indicates overwhelming public support for the bill.
But opponents question that support. Lawmakers haven't liked it enough to pass it out of committee. And incoming Senate President John Valentine, R-Orem, says the additions to the bill probably aren't substantial enough to change hearts.
"I understand the contrary argument," he said. "But you've got to overlay that against the philosophical background of Utah citizens. Tax disincentives to have large families run counter to their philosophy of what a family should be like in Utah."
Removing the federal tax deduction was a sticking point last year with House Republican leaders. That part of the bill would have generated twice what the "head tax" could. That irritated some Republican leaders, who said it was unfair to older, more well-off families with grown children.
Valentine suggests the bill would be more palatable to lawmakers if coupled with a tax reduction.
But Mascaro said that would defeat the bill's purpose. "Does a tax cut raise money for education?"
On the other hand, money for schools appears to be on its way, without tinkering with taxes.
Legislative Fiscal Analyst John Massey projects $324.7 million in new money will be available to lawmakers as they set next year's budget. Of that, 58 percent will be in income tax revenues, which are earmarked for education.
Mascaro acknowledges that will be part of the discussion.
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