State income tax credit to aid the working poor passes House

SALT LAKE CITY — A bill to establish a state-level earned income tax narrowly passed in the Utah House of Representatives on Monday evening, advancing to the Senate by a vote of 41-30.

HB197, sponsored by Rep. Eric Hutchings, R-Kearns, would create a Utah tax credit for certain people who work and have low wages. The federal government extends such a credit, which reduces the earners' tax burden. Some people also receive refunds.

Hutchings said earned-income tax credits reward the working poor.

"It is a policy that encourages self-reliance and individual effort," he said. 

If a low-income family is working hard and doing everything it can "to pull out of a hole, we're going to drop in a ladder" to help, Hutchings said.

Rep. Jim Nielson, R-Bountiful, argued against the bill, noting the tax code is not "the proper way to deal with our social challenges and needs that people have." 

The appropriation process would be a better approach, Nielson said.

Hutchings said that the tax credit would cost the state some $21.5 million and it is presently not funded in the Legislature's proposed budget.

But Hutchings said the legislation is a proven means to help low-income people improve their circumstances, something lawmakers need to consider given they have approved legislation aimed at breaking the cycle of intergenerational poverty. 

Conservatives support the concept of earned-income tax credits because they help working poor families "break that cycle," Hutchings said.

— Marjorie Cortez