SALT LAKE CITY — Angela McKinnon fought back tears Friday as she described why she wanted lawmakers to pass an earned income credit for Utah families plagued by poverty modeled after a federal taxpayer credit.
"This extra money is something that I count on. I need it. I work very hard, but it's not enough. I’m not an extravagant person. I don't spend my money on expensive things or fancy things," McKinnon, a call center worker from Taylorsville, said.
Speaking at a news conference called by 14 organizations supporting a series of tax reforms for moderate- and low-income Utahns, McKinnon said she uses the money she receives from her federal tax filing "to survive" throughout the year.
"If this is approved, it will definitely help working people who really need it," she said.
What's being called the "Utah Intergenerational Poverty Work and Self-Sufficiency Tax Credit" would give some 25,000 Utah working families that already qualify for the federal earned income tax credit an average of $240.
Matthew Weinstein, of Voices for Utah Children, said HB57 would make Utah the 30th state in the nation to offer an earned income credit. He said the federal credit is claimed by nearly 1 in 5 Utahns.
In a letter to lawmakers, the organizations called for using the $80 million windfall anticipated as a result of the $1.5 trillion federal tax cut approved by Congress late last year to help less-fortunate Utahns.
"So many of the individuals and families that we work with and represent already struggle to keep a roof over their heads and food on the table," the letter said, and pay taxes. "Reducing their tax burden will better enable them to make ends meet."
The earned income tax credit bill has passed both the House and Senate even though similar bills have failed in the past. But the $6 million price tag has yet to be funded.
And it is not part of the tax reform package Republican legislative leaders are backing.
Senate leaders said again Friday the plan is to lower the state income tax rate from 5 percent to 4.95 percent, give corporations a tax break by adopting a single sales factor formula and freeze the state property tax rate to allow for inflation.
Weinstein said about 60 percent of the state income tax cut will go to Utah families earning more than $115,000 and that the corporate tax break will cost taxpayers $28 million annually once it's fully phased in.
He also said the federal income tax cuts won't be as beneficial to larger families, but the proposals advanced by the advocacy groups are "ways to hold harmless" that impact.
Lawmakers are working to finalize the state budget so action can be taken next week, before the session ends at midnight Thursday. They have an extra $581 million in revenue growth and budget surplus to spend.
Senate President Wayne Niederhauser, R-Sandy, said he'd like to see money set aside for schools in a special restricted account separate from the state's rainy day fund, just as lawmakers did in 2007 with $100 million.
"We were so thankful we had that money when we went into a recession," Niederhauser said, noting that this year, "there's so much money, we can't spend it all."
He said the amount going to an education fund would likely be less than $100 million and suggested some of the money could be used to pay for new school security measures that could come up in a special legislative session later this year.
Also not part of the tax reform plan is HB148, a bill removing the state's 1.75 percent sales tax on food and raising the 4.7 percent rate on other purchases to 4.92 percent to make up for the lost revenue.
That bill has passed the House but hasn't had a Senate hearing.
Bill Tibbitts, of the Coalition of Religious Communities, said an extra $10 a month would enable the people who come to the Crossroads Urban Center food pantry to buy an extra package of diapers and a few more gallons of milk.2 comments on this story
"Every week we see families that are just on the edge of being homeless," Tibbitts said. "Not having to pay the state sales tax on food "will make all the difference for them."
Senate Majority Whip Stuart Adams, R-Layton, said the Senate has "looked to do the opposite." Adams said taxing food helps stabilize sales tax collection and without the tax, programs that benefit low-income Utahns could be cut.
Two other bills were cited by the advocacy groups, HB276 and HB277, which deal with tax credits for lower-income Social Security recipients. One of those bills, HB277, failed to advance from a Senate committee.