Our Newest Colleague
When Senator Margaret Dayton retired from the Senate, Rep. Keith Grover was appointed to take her place, creating a vacancy in the House. Today, Marsha Judkins was appointed and sworn in to represent West Provo and South Orem in District 61. It was my pleasure to welcome her to the House as part of “Team Provo.”
Special Session Report
Today the State Legislature met in Special Session to address specific issues raised by Governor Herbert. Here is a short review of my thoughts and perspectives on a few of the biggest issues.
Tax Reform
The most important reason for the special session was one that we have been working on since the end of the regular session. When the federal government passed federal tax reform in 2017, it created the need for states to adjust their laws for consistency. With our session ending in early March, not all of the federal implementation was finalized in time for us to respond accordingly. Three issues came to the forefront after we had already adjourned.
- The Family Fix – Because of the way that state tax law interacts with federal law, some Utah families actually saw a net increase in their total income tax (state + federal). This needed to be fixed. Today we passed changes that will remedy that problem. We will probably need to do more in the 2019 General Session, but this is a good start.
- The Repatriation Tax and Net Operating Loss – The federal tax reform included incentives for businesses to encourage that hold earnings in foreign countries to bring that money back to the U.S. as well as changes to the way businesses can use losses in one year to offset earnings in another. We made changes to our system to align how the state treats those situations with the federal rules, making it simpler on businesses to report income.
Internet Sales Tax
The United States Supreme Court opinion in the Wayfair case set the guidelines for how states can collect the “use tax” on internet-based purchases. Legally, Utahns have already been required to pay this tax for years, but enforcement is difficult. However, Utah has been working with online retailers who voluntarily collect and submit those taxes on behalf of Utahns. By some estimates, we are getting well over 80% compliance currently. In order to comply with the requirements of the Wayfair opinion, we made some changes to our tax code. However, as I had hoped, this bill should be revenue neutral – as revenues rise from collection, other taxes will fall. When we come back in the general session, it may be possible to use those revenues to reduce the sales tax rate generally. We will see if there is political will to do that.
The Inland Port
As you may recall, during the General Session, we created an Inland Port in Salt Lake County near the airport. Not everyone was happy with how it played out. Since the session, ongoing negotiations have led to several consensus changes to improve the concept. Today those changes were adopted.
