Taxpayer Win in Utah: Voters Chip Away at Income Tax Earmark – Amendment G

Submitted by dhendricks on Thursday, November 12th, 2020, 2,08 PM

Utah voters approved Amendment G, which appeared on the general election ballot. This taxpayer win is a great first step towards ending an antiquated approach to managing the state budget.

Since Utah has had an income tax in place, 100% of income tax revenue has been earmarked for ‘education.’ This bizarre arrangement, which is almost exclusive to Utah (Alabama has a similar earmark), has resulted in Utah state government costing more than it should and would otherwise be the case.

Despite the fact that Utah has experienced significant surpluses in income tax revenue – roughly $1 billion in 2019 alone – not a single dollar could be used to cover other parts of the budget. As a result, other taxes have remained higher than “necessary” since income tax revenue could not go towards any other government programs.

This arrangement has also made it incredibly difficult to deliver pro-growth tax reform that reduces, or ideally phases out, the state income tax. “This [earmarking all income tax revenue for education] means the most powerful lobby in Utah – the teacher’s union – is an opponent of all pro-growth reductions in the state income tax burden,” explained Grover Norquist in an OpEd in UtahPolicy.com.

Amendment G, which won about 54% of the vote, starts to chip away at this earmark on income tax revenue. Thanks to Amendment G, income tax revenue can also be used to fund programs for children and the disabled. Not just education.

This reform, which will offer greater flexibility in the budgeting process, will allow hard earned taxpayer dollars to be used more efficiently and reduce the threat of future tax increases. It may even facilitate lower tax rates.

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