Herbert, Adams and Wilson. Just three regular guys, right? Not really. Over the last legislative session Gov. Gary Herbert, Senate President Stuart Adams and Speaker of the House Brad Wilson showed political courage we rarely see.
We say we want our elected officials to take care of business and do what they were elected to do. Voters elect people they think will get the job done, whatever that job turns out to be.
But conventional wisdom expects little good of politicians and says such things about them as: they always kick the can down the road; they hold their fingers to the wind to gauge popular sentiment; they always have their eyes on re-election; they don’t spend political capital if they’re popular; and they especially won’t mess with big companies and powerful industries with influential lobbyists. That’s the narrative.
But not this year. Not here. Because we have seen something fine. These three top leaders and their associates warned us that Utah has a serious and growing flaw in our tax structure, which unless changed won’t allow the state to pay its bills. They also told us they were going to tackle it.
There are two main sources of state tax income: income tax goes into the education fund for public and higher education only. Sales taxes flow into the general fund to pay for everything else, like courts, social programs, general government operations and buildings, and highways. A burgeoning economy keeps pumping income taxes into the education fund. But changes in our shopping patterns have hit the general fund hard, to the point that it won’t long support general government operations and building highways as it has historically done. We shop for far more services than we used to, most of which incur no sales tax.
These leaders have warned whomever would listen that we need to make big changes in our tax structure. However, as regular as the sunrise, the specifics in the actual proposal met with stiff resistance. Even though the net result will not increase overall taxes, indeed, there is a sizable tax cut included; even though the sales tax rate will be reduced significantly, many groups registered strong opposition because new categories of services and goods would be taxed.
Because haircuts, shoe shines and accountant fees have not been taxed before. It will look like a tax increase to their customers. If these newly taxed businesses compete with out-of-state vendors, it will increase the prices Utah businesses must charge. Some companies may not be able to collect the tax from their customers, so the businesses will have to dig it up.
The public hasn’t raised a hue and cry. But the businesses and industries who would be required to collect sales taxes on their previously untaxed goods and services certainly did. They rose up forcefully, which caused the Legislature to pause. They decided to further study the changes with more time for public input and debate.
Indeed, what these men did is all the more courageous because there was absolutely no one lobbying to change the system. Only insiders — economists and analysts — understand this arcane topic sufficiently to know a crisis is coming. Most elected officials will not set themselves up for the kind of heat generated by tax reform without a clear imperative to do so … and there was no imminent financial default or political pressure to do it.
Concededly, the Legislature adjourned without passing the tax reform bill. But they’re on the 10-yard line, and I’m confident they’ll punch it through this year.10 comments on this story
Maybe the sponsors should have vetted their proposal more and gotten input earlier. Maybe they underestimated the resistance. Maybe they overestimated their colleagues’ willingness to face the heat.
I doubt it. This is such a huge lift, there’s no perfect way. That’s why things of this import rarely happen in one session. Reforming the tax system is one of the most difficult things a politician can pull off.
Kudos to new House Speaker Wilson and new Senate President Adams, who in their first year took on and nearly completed this gargantuan task, and to Herbert for incessantly sounding the alarm about the need for tax reform.
What we have seen is definitely not politics as usual.