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Tuesday, December 19, 2006

Ain't gonna happen

Taxation & Economics 101: If you want income that remains stable through the ups and downs, you should impose a very tiny tax on a wide variety of items. I.E.: broaden the base and lower the rates. A higher tax on a very few items results in a revenue stream with wild mood swings.

Utah is stable. Our economy is healthy. We have a highly coveted triple-A bond rating, and are consistently regarded as one of the best financially-managed states in the nation. The senate is going to favor policies that enhance that status, not detract from it.

The senate approved reducing the tax on food (to take effect next year) because that will lower the rate while it keeps the base constant. As a group, we're not okay with doing away with it altogether. That would be shrinking the base, making our revenue stream incrementally more volatile.

Anyone who is serious about cutting taxes will find a different place to cut them.

19 Comments:

Blogger Voice of Utah said...

"Anyone who is serious about cutting taxes will find a different place to cut them."

Yes, and who else thinks that place will be occupied by persons with 6+ digit incomes? (Sorry, couldn't resist the softball.)

12/19/2006 10:01 PM  
Anonymous Anonymous said...

Talk about a softball....

Class warfare is the typical liberal response to tax policy. It is interesting that Voice of Utah seems to think that those that PAY the majority of taxes should recieve no tax relief, while those special individuals that are the "entitled" class should get the tax breaks, welfare benefits, etc.

Sorry, Voice of Utah, but your theories have been weighed, measured, and found wanting every time government has attempted to implement them.

12/19/2006 10:39 PM  
Anonymous The Man said...

Tax the rich, feed the poor till there are no rich no more.

12/20/2006 5:42 AM  
Anonymous The Man said...

I would like to wish everyone a feliz kwanzaa!

12/20/2006 11:57 AM  
Blogger The Senate Site said...

Voice of Utah brings up a subject worth some thought.

Question: If we a) want a tax cut package that directly benefits lower as well as higher income brackets, yet b) find it unwise to completely delete the tax on food... what other options should we be considering?

12/20/2006 12:38 PM  
Blogger The Senate Site said...

BTW - we posted this blog last night as a gentle but clear counterbalance to yesterday's Deseret Morning News editorial: An embarrassment of riches.

This was not a "shot across the bow" and shouldn't be interpreted as such. To our knowledge, the House hasn't taken a position on tax cuts, beyond the sheer amount they want to cut, and that it should be linked to education funding.

12/20/2006 12:58 PM  
Anonymous Sean said...

No more food tax--in a time of surplus after surplus, it's time we showed some compassion for the poor.

And while we're at it, let's stop embarassing ourselves with our lack of education spending.

12/21/2006 11:26 AM  
Anonymous Anonymous said...

If it is not "serious" to suggest that we stop taxing basic necessities like food why not broaden the base a bit more and place taxes and fees on medicine, sunshine and oxygen? That would provide remarkable stability to our tax system.

The only class warfare going on is coming from certain senators who can't afford to care about their constituents because of their various conflicts of interest.

12/21/2006 11:27 AM  
Blogger pramahaphil said...

Hello everyone.

I would like to return to Voice of Utah's question:

"If we a) want a tax cut package that directly benefits lower as well as higher income brackets, yet b) find it unwise to completely delete the tax on food... what other options should we be considering?"

While I am appreciative of the tax cuts that the legislature has passed, I believe there has been many viable options that have been balked at.

-- The Governor has a flat tax. Tax relief for the upper class is signed and delivered. (If anyone needs my analysis of the flat tax as a break for the rich, I invite a visit to my blog archives for an exhaustive review)

-- The rate drop to 6.98% from 7% is nice, but could have been more friendly with brackets that are actually in a real income range (11,000 is where the top bracket phases in). True tax relief for the lower and middle class could benefit from some smaller implementations of a few Federal tax breaks (family friendly Child Tax Credit's, Saver's credits for lower-middle class families who save for retirement, and a smaller version of an Earned Income Credit for low income wage earners)

Once more I appreciate the steps taken to cut taxes in this state, however a broader effort could have been made to offer real tax relief to the middle and lower income taxpayers. The wealthy definitely pay there fair share and deserve some relief, but not at the cost of those who are less able to pay taxes.

Lastly, our State Tax Commission does a masterful job at collecting tax, but I believe they should have some reigns put on their tax collecting power. The Federal government requires the IRS to collect tax debts within 10 years, and requires the IRS to accept all reasonable offers to settle outstanding tax debts. The State of Utah has put no such reigns on the power of Utah State Tax Commission. As a tax practitioner I have seen many gross abuses of this power against taxpayers (in one case even breaking federal law that disallows leins to be placed against active duty soldiers). There needs to be operational reigns placed on the Utah State Tax Commission.

12/21/2006 10:13 PM  
Anonymous Anonymous said...

There's a fundamental danger when an institution forgets it's primary purpose. Nowadays, with our over-emphasis on the almighty dollar, we seem to prioritize that above all else. True; a government needs to be fiscally responsible and operate on good business principles, but when a "stable income" takes a higher priority than serving the people, the government has forgotten its purpose.

"I have always felt that the real purpose of government is to enhance the lives of people and that a leader can best do that by restraining government in most cases instead of enlarging it at every opportunity."
- Gerald Ford

We have the opportunity to serve the citizens of Utah by removing this food tax. It is realistic, it is right, and it is possible. If the Senate finds a diversified income stream more appealing than service to the people, then has it not forgotten its primary purpose as our government?

12/22/2006 3:52 PM  
Anonymous Anonymous said...

If you want a broad tax that will be stable, why not a head tax. Tax every human being in Utah the same amount. A head tax is very difficult to avoid.

12/22/2006 7:37 PM  
Blogger The Senate Site said...

You've been reading Luke Chapter 2, haven't you?

12/22/2006 7:54 PM  
Blogger The Senate Site said...

The "stable income" argument is only the first of a dozen or so lines of reasoning that carried the day when the legislature decided against removing ALL the sales tax from food. Of course there were persuasive, respectable arguments in favor of removing that tax. This was the focus of intense debate last session and we heard every argument imaginable. Some were solid, some less effective. Our ultimate stance may have been fiscally responsible, but the only friends it seemed to win us were economists and accountants. Sometimes that is part of the job.

Water under the bridge.

Returning to the previous question: given that almost all of us are committed to a huge tax cut (as well as staggering increases in education, and probably transportation) -- but given that this particular tax cut may have an uphill battle -- what other ideas would our readers like the legislature to consider whereby we can, as our anonymous friends have suggested, serve the people and show compassion for the poor?

I’m suggesting we set frustration aside and brainstorm a new approach.

Kudos to Green Jello for his substantive comments. Thanks Pramahaphil. I’ve passed them along to Senate Leadership.

12/24/2006 12:29 AM  
Anonymous Anonymous said...

How about reducing or eliminating fishing license fees? Or access fees to state parks?

12/27/2006 5:47 PM  
Anonymous Anonymous said...

Why not follow NJ's lead - how many states still tax basic food and food ingredients? 30 states and the Disctrict of Columbia DO NOT tax food. Wyoming was the latest addition to that group.

How about placing more taxes on services? States like New Mexico and South Dakota tax almost all services. NJ added a bunch of services to their list in order to create some new revenue.

I don't think that basic things like food should be taxed. Federal income tax strips the average person bare - why not give us a break on food for home consumption?

12/29/2006 6:16 AM  
Blogger Diamondback Jack said...

"Why not follow New Jersey's lead?"

Now THAT is a persuasive argument! But why stop with just tax policy? Why not dump industrial waste everywhere too, then build casinos on top of it? Maybe the legislature can make the floating syringe our official state flotsam. For an encore, they can bring the entire state government to a grinding halt.

New Jersey...?

12/29/2006 12:15 PM  
Blogger pramahaphil said...

I would disagree with taxing services, but for wholly biased reasons.

1/01/2007 11:05 AM  
Anonymous Anonymous said...

Diamond back Jack:Why not follow New Jersey's lead?"

Now THAT is a persuasive argument! But why stop with just tax policy? Why not dump industrial waste everywhere too, then build casinos on top of it? Maybe the legislature can make the floating syringe our official state flotsam. For an encore, they can bring the entire state government to a grinding halt?

You are an uneducated person. Do you stop to check your facts before writing about something you know nothing of? The New Jersey casinos are buikt on a Pier that has been there for over 100 years, and has hosted casinos for that long too.

As to industrial waste, you probably have more in your "wide open spaces" than we have in our metropolis. And when it comes to stopping the state government, what the heck, the Federal government came to a grinding halt too, did you complain...yep thought not.

I do agree with you about the syringes, but that is from another state (NYC).

Why do people always think it is good to slam another state, do you think yours doesn't stink, think again. Have a nice day :)

1/09/2007 6:31 PM  
Anonymous Anonymous said...

BURIED in the seventh paragraph of Bob Bernick's article is this little gem:

"A fifth of Utahns said they favor removing the rest of the state sales tax on food."

A fifth = 20 percent. One out of five. That's not much. Certainly not enough to justify all the hoopla coming from very narrow segments of the state's population. If the percentage had been higher, our zealous friend at the DNews would have trumpeted it to high heaven (as he has in the past).

(Source: http://deseretnews.com/dn/view/1%2C1249%2C650220959%2C00.html)

1/14/2007 2:01 AM  

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