Many Utahns never felt the recent earthquake. It occurred when a legislative fiscal report warned that growth in income-tax revenues will drop nearly 50 percent, down a sizable $149 million.
The world is awash in bad debts; the financial newspapers have been describing this as an era of highly unstable trading markets on an international scale not unlike the beginnings of the Great Depression.
Personally, I find it necessary to keep abreast of this type of news, because of my concern about our recent Utah income-tax reform and the long-term impact on taxpayers and public education. I think we've got significant problems that need to be addressed (go to www.utahtax.org).
Problem 1: For decades we've been taxing nearly all workers at one rate 7 percent. Raising public education funding in this fashion has damaged our social fabric by pitting taxpayers against schoolteachers, childless couples and retirees against families with children. Recent reforms still tax average workers at a single rate, 6.3 percent, a tax reduction, yes, but with a real cost to improving public education.
Problem 2: A booming construction industry (based on loose mortgage credit) led our legislators to cut taxes. This tax cut of $200 million reduces our annual public-school funding by 7 percent. Legislators now have only the bare minimum of funds for schools to keep pace with enrollment growth and inflation.
Problem 3: When times were good, legislators cut taxes instead of saving the surpluses in our Education Rainy Day Fund. Now in lean years, teachers and staff will be faced with funding insecurity.
Problem 4: Approximately 100,000 taxpayers, many retired or families with moderate incomes, will actually pay more rather than less income tax next year because of the new reforms.
Problem 5: Over the past four years, Utah's wealthiest 1 percent reaped huge financial gains and naturally paid more income tax (thus creating surpluses). Our GOP leadership felt their pain and rushed in to lower the top tax rate. Yet decades have passed where the middle class has wrongfully been moved into the upper tax rate without similar tax relief.
I find it ironic that we have an income-tax policy called a "5 percent single-rate" policy when in fact, there are actually two rates, and the higher tax rate, 6.3 percent, applies to the average worker.Had legislators properly understood these problems, they could have used a multiple tax rate policy. This would have provided more substantial tax relief ($500 tax cut) to the moderate-income taxpayer and also protected our public school funds. The current single-rate income tax policy does neither.
Matthew Frandsen, an engineer, ran in House District 8 in Weber County.