State Representative Jack Draxler (R-Cache County) has drafted legislation for the upcoming 2015 Legislative Session that would increase the individual income tax rate from 5% to 6%, imposing a whopping $585 million tax hike on Utah citizens. The purpose of this tax increase would be for public education funding, specifically increasing teacher salaries. The Education Task Force has applauded Draxler’s courage and are recommending that the money go into base salaries for teachers instead of just performance pay. But praise of Draxler’s tax plan is misguided.
The true issue with teacher compensation is not low salaries. Rather, the problem is that teachers are essentially “laid off” for a third of the year. If meaningful changes are to be made in teacher compensation, they should come through allowing full-time employment for teachers.
Beyond problems with where Draxler is hoping to channel the increased tax revenue are problems with the tax increase itself. As explained in the previous accompanying article, Utah ranks well on overall business tax climate in part because our individual income tax structure is fairly good relative to other states. The individual income tax has the single biggest impact on business competitiveness and high-paying jobs. Businesses with the best paying jobs don’t want to locate in states with a high individual income tax rate, because the company can’t attract top executives. Rep. Draxler misunderstands this when he says that his tax change “does not touch the corporate rate so we maintain our place as a state for business.” The corporate tax rate is only one of many tax factors influencing business.
In 2007, your Taxpayers Association successfully worked to lower the individual income tax rate from 7% to 5% following years of state revenue surpluses. We have been able to keep that rate down throughout the recession, and will continue our role as watchdog to ensure that the income tax rate is not raised. Your Taxpayers Association will push for even lower rates that will boost state competitiveness, individual well-being, and the long-term tax viability of our state.
Representative Jack Draxler