This is an archived article that was published on sltrib.com in 2017, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
A Senate committee made quick work Wednesday of shutting down a bill that would lift the income tax rate for wealthy Utahns.
Without debate, from lawmakers or members of the public, the Senate Revenue and Taxation Committee voted 4-2 against SB141, which would create a 7 percent income tax for individuals earning more than $250,000, or couples earning more than $500,000.
Utahns below those earning levels would continue to be taxed at a 5 percent rate.
"This isn't about class warfare," said bill sponsor Sen. Jim Dabakis. "This is about a tremendous gap in education funding, and we've got no plan."
Dabakis has frequently referred to the bill as his "soak the rich" plan for school funding, as the graduated taxing rate would generate roughly $321 million each year for the state's Education Fund.
Public school funding in Utah is currently lowest in the nation, on a per-student basis, and Dabakis said years of tax policy has been based on the idea that low taxes would spur economic growth, which in turn would generate classroom funding.
But that plan has not succeeded, Dabakis said, as state leaders laud the current state of Utah's economy while schools struggle to fill staffing positions due to a statewide teacher shortage.
"We have never had a more robust economy," Dabakis said. "We're at the top. We're at Mount Everest. We're as good as it gets."
He said the time had come to return to the graduated tax that existed before 2006, when the income tax rate was cut as part of a tax reform package backed by then-Gov. Jon Huntsman. Despite the higher taxes then, Dabakis said, the state's economy was growing and jobs were being created.
"We're still 50th [in school funding] and we're not 50th by a little," he said. "We're 50th by a lot."
Senate Republicans are currently drafting a series of tax reform bills aimed at stabilizing state revenue. A key plank of that reform, according to Senate President Wayne Niederhauser, R-Sandy, would be an increase in the sales tax on food, offset by a decrease in the general sales tax rate. Critics have noted that such a move would disproportionately burden low-income residents, who pay a bigger share of their income for basics like food.
Lawmakers are also watching the progress of a proposed ballot initiative by Our Schools Now, which is backed by a coalition of Utah business leaders and would ask voters in 2018 to raise the income tax rate from 5 percent to 5.875 percent.
Sen. Gene Davis, D-Salt Lake City, supported Dabakis' bill, saying lawmakers should consider various approaches as they look to reform the state's tax code.
"I think this is worthy of a good discussion on the floor," Davis said.
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