We have read several letters suggesting that limiting Utah income tax child tax credits to only two children per household would create enough additional revenue to eliminate the education funding problems. First of all, that would be by definition be a very regressive tax. But I strongly question that such an act would actually do what the proposers suggest. The child tax credit is only about $3000 per child, which at 5 percent would generate about $150 per child in revenue. My guess is that the sales taxes on a child’s yearly expenses for food, clothing, etc., would easily exceed $150, so making such a change in income tax would not only be regressive, it would discourage future families from having more than two children, which would in the long run reduce sales tax revenue, which would negate the increased income tax revenue.
Also, the increase in income tax for large families would mostly negatively impact lower-income families, who according to an Institute on Taxation and Economic Policy report are already paying a higher percentage of their income for state and local taxes than the upper 20 percent.