In our opinion: Editorial: Misguided tax policy

Published: Monday, April 16 2012 10:10 p.m. MDT

The Utah State Capitol, Jan. 25, 2012, in Salt Lake City, Utah.rn

Tom Smart, Deseret News

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Government policies affect how communities develop. And few efforts by government could be more important than creating a residential environment that honors family time and family commitments, or creating a business environment where there are ample high paying jobs.

Nonetheless, Utah communities that have succeeded in doing precisely these two difficult tasks seem to find themselves on the short end of revenue because of the way Utah divvies up its sales tax revenue. Because point-of-sale makes up a full 50 percent of the formula for sharing the sales tax in the state, Utah municipalities often engage in tactics to steal retail tax revenue from neighboring communities.

So municipalities like Provo, where the presence of Brigham Young University and a technologically savvy community help to incubate high-paying jobs built on extraordinary opportunities for technology transfer, get punished in the Utah tax revenue sharing game for preventing University Avenue from morphing into the overly-commercialized eyesore of State Street in Orem.

Or consider Highland City, a bedroom community that has attracted families to its majestic setting and family-friendly amenities, including its Sunday closing laws that allow families and neighbors to maximize their time together. But trying to find additional revenue without raising property taxes, Highland feels pressured to abandon its Sunday closing laws as a tactic to attract more general retail outlets to Highland.

This policy-generated focus on point-of-sale tax revenue is a lose-lose proposition for several reasons. Tactics to attract it merely reallocate revenue. There is scant evidence that they enhance overall economic development. General retail has little loyalty to local community or culture, provides mostly low-wage jobs, and it is one of the few sectors where jobs continue to disappear even as the economy picks up steam.

And in a day and age where too much of life is caught in an unhealthy 24/7/365 pattern of work, it seems tragic that a community like Highland would abandon the huge cultural asset it enjoys through Sunday closing laws simply to manage a fiscal squeeze. "Cultural asset" was the term Justice Felix Frankfurter gave to Sunday closing laws in his eloquent concurring opinion in McGowan v. Maryland, the long-lived Supreme Court case upholding the constitutionality of Sunday closing laws.

Frankfurter wrote that there is an "intimate relationship between civil Sunday regulation and the interest of a state in preserving to its people a recurrent time of mental and physical recuperation from the strains and pressures of their ordinary labors. … That day had a character of its own which became in itself a cultural asset of importance: a release from the daily grind, a preserve of mental peace, an opportunity for self-disposition."

And Frankfurter's analysis in 1961 came well in advance of the clear social science evidence that we have today showing a strong relationship between abandonment of Sunday closing laws and a significant decline in high school graduation and educational attainment.

Because communities that are doing well in supporting families and creating high paying jobs should not have to compromise the good that they do in order to share in sales tax allocation, we are heartened to hear that state legislators are working in interim meetings, on a bi-partisan basis, to rethink carefully the allocation of sales tax revenue.

One idea being carefully considered would include a community's overall payroll into the equation for allocation. Such a formula would give communities a healthier choice about the kind of commercial development that would be appropriate for their economic growth and for the preservation of their unique family-friendly culture. Because improved wages and family health are both required for lasting prosperity, we encourage state legislators to intensify their efforts to create a saner allocation of sales tax revenue than the current over-emphasis on retail point-of-sale.

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