Utah Legislature: Proposed tax on wealthy stifled in committee meeting

SALT LAKE CITY — A proposal that would have raised taxes on Utah's wealthiest residents — and put $100 million new dollars into state education funding — was bounced out of a legislative hearing Monday along party lines and likely will not be considered further.

Rep. Brian King, D-Salt Lake, sought to increase state income tax rates by 1 percent on those whose annual earnings range between $250,000 and $750,000, and 2 percent on filers who bring in more than $750,000 a year.

King, who recognized the pitch to raise taxes was likely a risky political move, said the change would help fill the gap in an already decimated revenue stream that has left the state unable to increase the nation's lowest per pupil funding rate, or even stay even with student growth.

Utah uses all of the money collected through state income tax assessments to fund public and higher education. For the coming fiscal year, financing for those areas is projected to remain relatively unchanged from last year, in spite of some 11,000 new students in the public education system and post-secondary institutions expecting 24,000 new degree seekers.

Allison Rowland, public policy analyst with the advocacy group Voices for Utah Children, said a change in the state's income tax system to a 5 percent flat rate enacted in 2008 not only cost the state some $200 million in education funding but also created disproportionate tax breaks for the wealthy.

"The benefits of this change are very much concentrated at the high-end level," Rowland said.

Critics of the bill said raising income taxes could work to dissuade new businesses from moving into the state and keeping money in the pockets of taxpayers was the best approach during difficult economic times.

"We need to stay competitive in a global economy," said Rep. John Dougall, R-American Fork. "To say we can tax and tax and tax and spend is a foolish and myopic view."

Former state representative Kory Holdaway, who now works as director of government affairs for the Utah Education Association, told the House Revenue and Taxation Standing Committee that a quality education system as a business attractor far outweighed income tax rates as a deterrent.

"Looking for new locations, public education is one of the No. 1 issues," Holdaway said. "It's one of the top two or three of what attracts business to the state." King also maintained that a vibrant, well-funded education system acts as an economic engine by drawing new businesses through maintaining a highly educated local talent pool. It also ensures growth moving forward, he said.

"We're talking about the future of the state of Utah," King said. "The future of our kids."

Rather than vote on whether to move the bill forward to the House floor, the committee passed a motion to send it back to the House Rules Committee, effectively ending further deliberation on the proposal

e-mail: araymond@desnews.com