Sutherland president comments on passage of tax reform repeal

Written by Rick B. Larsen

January 28, 2020

Sutherland Institute recognizes the Legislature’s practical and necessary decision to repeal the December tax reform package through passage of HB 185. A balanced budget mandate requires reliable revenue numbers, and the budget limbo created by the referendum on tax reform would have hovered until November. This would have made sound budgeting impossible, with negative consequences for important line items such as public schools, transportation, higher education, low-income services, air quality, etc. The very principle of fiscal responsibility made the repeal a necessary response.

The Good: 

From the perspective of restoring public confidence in the legislative process, repeal may be a good outcome. The signature-gathering effort was a dramatic signal that a significant portion of the voting public does not have confidence that December’s tax reform bill is the tax cut that it was reported to be. This is evidenced in things like parties being unable to agree on even the basic facts about the problems tax reform was intended to address, let alone consensus around solutions. In such an environment, the best path toward rebuilding public confidence in legislating is a long-term, transparent, in-depth study of the facts, including an honest look at the current tax system, past attempts at tax reform, and the overall principles of sound tax policy. The waiting period created by the referendum would not have served those ends and would have likely exacerbated the problem of public confidence by creating an environment conducive to greater misunderstanding. The prudent policy decision, therefore, was to repeal tax reform.

The Bad: 

The problems in the current tax system remain unaddressed. The best evidence available suggests that the current system cannot adequately support programs and services critical to supporting strong families, a healthy economy and thriving communities, not to mention well-maintained highways, healthcare services for low-income Utahns, improvements in air quality, and public safety through law enforcement. Finding solutions to these problems will be politically thorny for the Legislature – and a significant responsibility of a newly elected governor – but the work will be necessary for Utah to remain a state of economic prosperity and a desirable place to live, work and raise a family. Solutions will require incremental focus, political leadership grounded in prudence, sound economic principles, and statesmanship motivated by the common good.

Sutherland remains committed – post-repeal – to a thorough examination of the facts and principles pertinent to tax reform in Utah. We will continue to research ideas that work, inform the public about needs and timelines, and strive to ensure the well-being of Utahns statewide.

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