Originally published in Deseret News.

The passage of tax reform is only the beginning of the education funding discussion. During the reform’s many deliberations, important policy questions — like how Utah should balance income taxes and sales taxes, and how tax relief should be distributed — were addressed.

However, one question was not: How should the state fund public schools?

If tax reform is any indicator, the answer may be with revenue sources other than income taxes.

At Sutherland Institute, we recently analyzed data on the fiscal impacts of tax reform, costs to public schools from projected enrollment growth and consensus revenue estimates for the upcoming year. While some of this information is subject to change — revenue estimates will be updated in 2020, for example — these numbers offer a first glance into what tax reform may mean for public school funding.

The numbers suggest that post-tax reform, a mix of general fund revenues (mostly sales taxes) and education fund revenues (mostly income taxes) will be required to maintain the level of growth for public school funding seen in recent years. Based on recent comments from legislators and Utah’s governor about education funding, maintaining that growth will be a priority. In other words, a mix of income tax and sales tax funding seems to be the future of state funding for public schools.

This change could be a good thing. It shouldn’t diminish the quality of Utah’s public schools, and it may positively impact Utah’s economy.

The education of children is indifferent to whether state funding comes from income taxes or sales taxes. What matters most is how the funding is used and, secondarily, how much funding there is to use. Utah has relied on state income taxes for public schools because it is has been required by our state constitution for many decades. But if Utah moved from relying mostly on income taxes for state education funding to relying mostly on sales taxes, or relying on a more balanced mix of income and sales taxes, the quality of learning in public schools would not be undermined.

Further, if Utahns want to see an increase in Utah’s per-pupil spending, we may have to fundamentally change our public school funding model. Our per-pupil funding level is in part due to the large number of students we have in Utah, but also partly due to the system that generates the amount of funding available for public schools. It may be that Utah’s low per-pupil funding relative to other states is partly the fault of a devotion to funding public schools with income taxes, rather than being flexible about the source of funding for public schools.

From an economic standpoint, shifting away from income taxes in favor of sales taxes will certainly be a good thing. Research on tax policy suggests that corporate and personal income taxes reduce economic growth the most. Consumption taxes (i.e. sales taxes) and property taxes are less economically harmful. If, moving forward, Utah reduces its income taxes in favor of more sales taxes for state public school funding, it is likely to translate to a healthier, stronger economy with more job creation and better growth in family and household incomes. That would be an undeniably better result, especially for today’s children in public schools, who will need those jobs and incomes when they grow up.

Will a shift from income taxes to sales taxes for public school funding be a good thing or not? The answer is not yet certain, but there is evidence to suggest it could improve Utah’s economy without harming public school quality. And it may generate a flexibility in funding public schools that could improve Utah’s standing in per-pupil funding as well.

If the tax reform package jump-starts a change in Utah’s public school funding policy, years down the road we may look back and find it to be the most powerful outcome of tax reform. We may see December 2019 as the month we freed public schools from the limits of the income tax.