NFIB Victory: Tangible personal property taxes reduced
State Director Candace Daly reports from Salt Lake City on the small-business agenda following adjournment by the Legislature for the year
The Utah State Legislature wrapped up its 2019 General Session on March 14 with a gavel drop one hour early. NFIB walked away with some big victories for Utah small businesses, which included defeating a lot of bad ideas.
NFIB Victory—Tangible Personal Property Taxes Reduced
House Bill 231 Tangible Personal Property Revisions was a high priority for NFIB this session. As of the posting of this report, NFIB is still waiting for Gov. Gary Herbert to sign this legislation which passed by veto-proof margins in both houses. Here is what HB 231 does for small business:
- If your total aggregate taxable value per county is less than $15,000 you are exempt from tangible personal property.
- You must still file a signed statement to the county. If you file a signed statement for five consecutive years, a county assessor may not require the taxpayer to file a signed statement for each consecutive year for which the taxpayer qualifies for the exemption.
- Currently, you are not required to track an item that has an acquisition cost of $1,000 or less, after it has depreciated to a percent good of 15 percent or less, which is $150. New language in the bill, however, states that an item is exempt if the item is owned by a business and is not critical to the actual business operation of the business and the acquisition cost of the items less than $150.
- You do not have to list the items that have reached 15 percent of good that were purchased for under $1,000 or the items that you acquire for $150 or less that are not critical to the actual business operation.
- We consider this another win for NFIB members. Every year we reduce this burden for small business is a win. Our goal is to do away with this tax altogether.
Victories in Defeat
In addition to stopping the so-called Tax Equalization and Reduction Act, HB 441, NFIB Utah also succeeded in beating several bills this year that would have made it more difficult to run a small business, such as:
- HB 204, the Employment Selection Procedures Act Amendments, which would have prohibited an employer from seeking information regarding an applicant’s compensation history.
- HB 333, the Workforce Development Incentives Amendments, which would have required working-parent benefits when awarding economic development tax credits.
- HB 390, the Workplace Protection Amendments, which is a refile from last year, only with a different sponsor. It would have required employers with between five and 14 employees to proceed to an evidentiary hearing without a division investigation. The evidentiary hearing would be for complaints by employees for just about anything. NFIB believes it isn’t fair that employers with more than 14 employees would be able to take advantage of the investigations and those between five and 14 would have to go straight to court. NFIB also believes the federal level set at 15 is the accurate number of employees and should not be lowered.
- SB 110, the Family Medical Unpaid Leave Provisions, would have required businesses from 30 and up to 50 to give their employees up to three workweeks of unpaid leave during any 12-month period.
State Budget and Education Funding
Despite rumors that the Legislature would leave the budget unfinished, lawmakers came to a last-minute agreement and finalized it.
That agreement included funding some ongoing budget items with one-time money and requiring a deep dive into those items on the budget that used to be funded with on-going money and now only have one-time money until they determine if those funding items should continue.
The budget agreement also included a task force to study the money allocation problems that exist for the state. NFIB supported creating the Tax Restructuring and Equalization Task Force. This group of legislators will examine as many scenarios as possible and receive a lot of public input, to address and solve the structural imbalance.”
The centerpiece of the task force’s study will be education funding. “There are many options that need to be carefully considered to correct this allocation process,” explained State Senate President Stuart Adams.
“Some of those possibilities to consider include:
- changing the Constitution to re-allocating income tax so it can be used for more than just education
- reinstating the tax on food
- removing candy, soda, bottled water or dietary supplements from the current food tax exemption definition
- implementing ‘consumption taxes’ on services
- adjusting other tax rates.
“Additionally, considerations for the solution will include:
- income tax rate reductions
- additional exemptions for dependents
- social security tax credits
- and ETIC (credits for those in intergenerational poverty).
“Each option would add different amounts into the tax funds. Removing those four categories from the food exemption would add about $29 million. (Net gains for a full food tax would be about $236 million. If income tax reductions were added at the same time, families and individuals in Utah would pay $317 million less in income tax each year.)
The Job Ahead
NFIB’s primary focus will be keeping due vigilance on the task force, by attending all of its meetings and holding one-on-one meetings with elected officials. A possible special session around August could be called for any tax reform legislation the task force might propose.
Interim meetings also resume after the adjournment of the session, which means that legislators will be on the hill the third Wednesday of each month starting in May. Interim meetings are scheduled to discuss possible bills, to study issues, and to recommend bills to the Senate or House for consideration during the next session of the Legislature.
