businesses regarding capital gains are increasing and suggested the TRC study the capital gains tax.
Chair Cornia commented that the calculation of the credit may need to be modified because companies do not have the data to allow them to calculate the credit under the current
statutory provisions. Ms. Rockwell reviewed the fiscal notes for the two research and
development tax credit bills passed during the 1998 General Session. The members discussed
the importance of providing quality education in attracting businesses to Utah.
Ruth Ann Hamilton, Salt Lake Chamber of Commerce, stressed that the tax credits also benefit existing businesses in Utah.
3. Discussion on Sales and Use Tax Methodology and Review Process
Mr. Asplund distributed "Utah Sales Tax Exemption Expenditures," and
reminded the TRC that the process of reviewing the sales tax exemptions will begin in 2001.
Chair Cornia asked Mark Buchi to provide background information regarding the
purpose of establishing the TRC. Mr. Buchi explained the original three-phase plan for
improving the tax system including: (1) cleaning up the statutes; (2) making substantive statutory
changes; and (3) reviewing policy. He stated that phases one and two have been successfully
completed, and the TRC is now in the third phase.
Vice-chair Lee recommended the TRC study the sales and use tax base and see if it needs to be expanded. Chair Cornia reported that a national committee plans to present uniform
definitions to be used by states in defining their sales and use tax bases. These definitions are
being developed as part of a study on Internet sales and use taxation. Commissioner Oveson
reported that the Multistate Tax Commission is creating a pilot project on definitions and may
request assistance from the TRC.
The TRC then discussed the role of the Legislature in making tax policy changes.
Sen. Hillyard recommended that, to be more effective, the TRC: (1) lobby the Legislature; and
(2) seek the Governor's support of TRC's tax policy recommendations. He also recommended
the members read Showdown at Gucci Gulch, a book about the 1986 tax reform. Chair Cornia recommended the book Deep in the Heart of Taxes.
MOTION: Sen. Hillyard moved that the TRC, in conjunction with the Tax Commission and the Governor's office, review only selected exemptions, make recommendations, explain
TRC's position, and actively work for those changes in legislation. The motion passed
unanimously.
Commissioner Oveson discussed state sovereignty and suggested the TRC organize a Multistate Tax Commission advisory committee. Chair Cornia stated that the executive
committee will review the suggestion.
4. Income Tax Base, Rates, and Burdens
Tom Williams, Tax Commission, distributed the handout "Gross Income and Gross Total Tax Rate," and reviewed the tax burden for a family of four relative to income and ability
to pay. He said the income tax is slightly regressive because those in the upper brackets receive
deductions and those in the lower brackets use the standard deduction. Mr. Williams highlighted
information from a Minnesota study comparing states' 1994 state individual income taxes and
rankings by tax amount. He noted that Utah's income tax brackets have not been changed since
1973. Mr. Williams then discussed the impact of: (1) changing the brackets for selected adjusted
gross incomes; and (2) taking the full federal personal exemption. Vice-chair Lee asked Mr.
Williams to provide to the TRC an updated report showing who pays income taxes. Ms. Owen
asked about the impact of implementing a state earned income tax credit.
5. Other Business -
The next meeting of the TRC will be held on September 11, 1998 at 1:00 p.m.
6. Adjournment Vice chair Lee adjourned the meeting at 11:40 a.m.