1 April 2016 Volume 41 Issue 4 THE UTAH TAXPAYER A Publication of the Utah Taxpayers Association Victories, Progress Made APRIL 2016 During the 2016 Legislative Session Volume 41 Taxpayers fared very well during the 2016 Legislative Session, considering the major tax increases levied in 2015. Victories, Progress Made During the 2016 Legislative Your Taxpayers Association was successful in ensuring that Session key pieces of legislation passed that promote fiscal Page 1 responsibility and increase transparency. Your Taxpayers My Corner: New Item Pageon 2 Association also prevented the passage of bills that would have Property Tax Notice Does increased the tax burden on Utahns. Not Impose New Taxes These potential tax increases include SB 104, sponsored by Page 2 Sen. Jim Dabakis (D - Salt Lake City) which would have created a progressive structure on the individual income tax. This Legislative Scorecard andPage 4 increase could have cost individuals a total of $178 million in Friend of the Taxpayer 2018. Award Announced Page 4 Additionally, a bill sponsored by Rep. Raymond Ward (R - Bountiful), HB 153, would have cost taxpayers another $42 million in fiscal year 2018. This legislation would modify the Tax Day and a Brief Introduction to Income calculation of the certified property tax rate by including an Taxes adjustment for inflation. This increase would directly threaten Page 5 Utah’s Truth-in-Taxation law by causing automatic tax increases without any accountability. Senate Rejects Removing Neither of these bills passed the Legislature, due to the efforts Local Option Sales Tax of your Taxpayers Association and our partners. In fact, they For Salt Lake City never made it out of committee. Page 7 Utah 2.0 Your Association The Association’s major legislative initiative, Utah 2.0, had Accomplishments success beyond what most thought (continued on page 3) in March Page 8 Save the Date for the Taxes Now Conference Association Staff and “Teed Off On Taxes“ Golf Tournament Howard Stephenson President The Utah Taxes Now Conference is on Monday, May 16, 2016 at the Billy Hesterman Vice President Grand America Hotel, beginning at 8 am. You can keep updated on Spencer Nitz Research Analyst the speakers for this event at www.utahtaxpayers.org. Teresa Urie Executive Assistant Executive Committee Next, “Teed Off On Taxes” Golf Tournament on Thursday, June 9, 2016 at the Eaglewood Golf Course in North Salt Lake. Mike Edmonds Chairman Sponsorship opportunities are available. Kent Stanger Vice Chair Bobby Rolston Secretary Space is limited at both of these events. Brice Arave Treasurer Keith Pitchford Legislative Chair Contact Teresa Urie at [email protected], H. Val Hafen At Large or by calling (801) 972-8814 for more details. 1 www.utahtaxpayers.org 12 April 2016 Volume 41 Issue 4 My Corner: New Item on Property Tax Notice Does Not Impose New Taxes Taxpayers will see an attending local district schools. This money is additional line item on coming from growth in state income taxes, not from their property tax notices tax rate increase. This is a step in the right direction this year but that does not as it ensures that all Utah students attending a mean there is a new tax public school are receiving adequate funding and being levied. also further ensures that Utah students have a That new item on the choice in where and how they receive their Association President Howard Stephenson property tax notice education. represents the work of While much of this is positive for taxpayers and Utah’s Legislature on Senate Bill 38. The bill brought Utah’s students, there is one caution that comes greater equity in funding for Utah’s students as it with this bill. increased the amount of state money appropriated to As this new line item on the property tax notice is charter schools by $20 million. The bill also added an handled, some local school districts may seek to increased amount of transparency to the property tax increase their own taxes in the future and justify the notice as it will now show how much of a property hike by claiming the districts are losing money to owner’s taxes are going towards their local school the charter district and the share of taxes going to fund students schools. To who live in the district but attend a charter school. prevent this Property tax notice In the past, the notice has not shown taxpayers how from will now show taxes much of their property tax went towards charter immediately schools as the notices usually showed line items for happening the for charter schools their local district and the basic statewide levy. legislature Thanks to Senate Bill 38, a new line item will be included a provision in SB 38 that prevents school introduced to show the portion that the charters will districts from raising taxes this year unless they receive. made their intentions to increase taxes known by How this will occur is that the current line item for March 4. the school district will now subtract the portion of However, that does not mean that in the years to the taxes collected for charters to show how much of come the district schools will not seek to ask the property tax is going to the local district. The next taxpayers for additional money citing the amount line will then show the subtracted amount for given to charters as the reason. That argument charters to show how much of the tax is going to should be dismissed immediately. Taxpayers are charter schools. If a taxpayer adds the two numbers paying to ensure all Utah students have the best together, they will find that the combined tax rate is education possible. If a student chooses to attend the same as it has been prior unless the district is one school over another that should not sound the raising its tax this year. alarm for higher taxes. Instead, that should send a At the risk of over explaining it I’ll try it one more signal to the school losing the student that it is time way. The taxes collected for public education in Utah to improve and find a way to be more attractive to will still occur the same way and at the same that student. amounts. What Senate Bill 38 is changing is an We expect Utah’s students will be the greatest explanation of how much of their tax goes to the benefactors from this legislation as it makes great district school and how much goes towards charter efforts to ensure that every Utah student has an schools. opportunity for a great education in Utah. The Charter schools will still have no taxing authority Taxpayer will also benefit, as they will have the under this bill but will receive additional funding opportunity to better understand how their dollars from the state to go towards closing the gap of are helping Utah students succeed. funding between charter students and students 2 www.utahtaxpayers.org 23 April 2016 Volume 41 Issue 4 2016 Legislative Session Recap (continued from page 1) was achievable in one year. are educated and prepared for the future. SB While Utah 2.0 was set up and continues to be a 103, sponsored by Sen. Ann Millner (R - Ogden), multi-year approach to continuing Utah’s establishes a process for investing strategically economic viability and competitiveness, taxpayers in workforce development through the use of should be pleased with what has been stackable credentials. accomplished. Remote Sales HB 61, sponsored by Rep. John Knotwell (R - One of the most hotly contested issues during Herriman), expands the NAICS codes that are the Session was taxation of remote sales, which allowable for electable single sales factor. If you’ll are sales made at a non-traditional store, located recall from our March newsletter, single sales outside of the state. These can include purchases factor is a calculation for the corporate franchise made online, by mail-order, or by telephone, tax, which allows businesses to exclusively be among others. taxed on their sales made within the state. As a quick reminder, in order to be taxed by a This option is available to some industries, but governmental entity, a company must have not others. Your Taxpayers Association, through some form of presence within that entity, in our Utah 2.0, is committed to ending this inequity and case, the state of Utah. Out-of-state, or remote, will fight for this over the coming years. sellers cannot be taxed under law. The second component of Utah 2.0 is similar to Currently, any taxpayer that makes a remote the inequity that exists in the corporate franchise purchase is required to remit the amount of tax. Currently there is a sales tax penalty for some sales taxes to the Tax Commission when filing inputs used for manufacturing. If a piece of their taxes each year. That amount is calculated equipment lasts longer than three years, it is and then distributed accordingly between exempt from sales tax. If its useful life is shorter different governmental entities, as it would be if than three years, the purchaser is required to pay that person were to make a purchase at a local sales tax, creating a double taxation for some brick-and-mortar store. businesses. However, few taxpayers are aware or remit Your Taxpayers Association stands behind the and inform these remote purchases to the Tax principle that only outputs should be taxed, which Commission. In fact, state fiscal analysts is where HB 180, sponsored by Rep. Brad Wilson estimate that the amount that should be (R- Kaysville), comes in.