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Taxation

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The Utah Education Association's Position
on Various Forms of Taxation

Income Tax, UEA's position:

There are a number of state taxes that are inherently regressive. The term "regressive" means that the percentage of income paid in taxes decreases as income increases . The most notable is the sales tax. The income tax, on the other hand, has the capacity to be structured so as to ameliorate the regressive tendencies of the sales tax. We believe that maintaining an element of moderate progressivity with the income tax burden is a worthy objective.

We are not opposed to the concept of a so-called "flat" income tax structure. However, it is imperative that any "flat" tax structure protect a meaningful "poverty floor" by excluding some level of income from taxation. In addition, for a "flat" tax to maintain any progressive characteristics there is a need to guard against the reinstatement of many existing tax deductions. If a flat tax is not adopted we support the re-bracketing of the current income tax.

We are in favor of the elimination of the current deduction for one-half of the federal tax liability. Tax deductions should serve some positive purpose in terms of providing an incentive to promote a change in behavior. We fail to see what positive purpose is served through this deduction and its inclusion has the impact of further skewing the income tax in favor of a limited number of high income earners.

Property Tax, UEA's position:

The property tax has been clearly identified as the most reliable and stable source of revenue. The role of property tax in education funding has been greatly diminished over the last decade. What used to comprise about 25% of public education funding has now been reduced to 16%. The state minimum education tax levy has been cut in half over that time. Most troublesome is the fact that the current system actually forces continued reductions in that state rate and further exacerbates the situation. There is a need to incorporate some type of inflationary adjustment as part of the state rate-setting process. A similar situation exists at the local level with the impact of truth-in-taxation.

RDA reform, UEA's position:

We have long been concerned with the erosion of property tax revenues associated with questionable economic development projects. Increased scrutiny about future projects is entirely appropriate. We encourage the legislature to move forward with meaningful reform and support the proposal of allowing public education the option of choosing to participate in future RDA projects.

Corporate Income Tax, UEA's position:

We opposed legislative efforts last session to phase out the corporate income tax. We were concerned that some legislators were willing to look at this one aspect, with a $200 million price tag, without discussion of revenue alternatives. We remain opposed to taking a "leap of faith" of this magnitude. Even more modest changes such as the use of a single sales factor apportionment methodology carry significant fiscal impacts and merit a plan to replace the lost revenue.

Constitutional Earmarking of Income Tax, UEA's position:

From a purely public policy standpoint, we acknowledge that in general there are legitimate arguments against earmarking tax dollars. As a general principle, policy makers should be able to utilize tax revenues where needed.

The constitutional restriction may well have artificially limited the legislative ability to address certain funding needs in the past. These concerns prompted the 1996 constitutional amendment that allowed higher education to utilize income tax. We believe that this UEA supported constitutional change provided any needed flexibility.

There are other important considerations associated with the Article XIII, Section 12 restriction currently found in the Utah State Constitution.

First, the very origins of this provision involve keeping faith with the citizens of Utah . The constitutional restriction is not some archaic provision incorporated at statehood for which we can find no idea of its origin. Rather, a constitutional requirement that income tax be required to support public education was a condition of the state when it initially imposed the income tax.

The origins of this provision and the promise made to Utah voters imposes an affirmative obligation on those seeking to change the provision to justify that change. The burden of proof does not rest with those seeking to retain it.

Secondly, concerns over why this proposal is being considered also raise questions as to what agenda is being pursued. Concepts such as shifting education funding away from property tax to sales tax or allowing large diversions of income tax revenue to non-education areas create real anxiety within the public education community. To date we have not been presented with a compelling argument for a constitutional change.

Lastly, we believe that the constitutional provision is viewed by many as an affirmative statement of public support for education.

Changing the constitution would require "trusting the legislature". As a practical consideration, we believe that such a constitutional amendment can only be passed through the legislature and approved by the public with the strong support of the public education community. Obtaining that support from Utah teachers at this time would be very difficult.