When it comes to any kind of large-scale tax reform, messaging is vital. Utah’s legislative leaders might be able to persuade the public if they could sit down with each person for an hour and go through details and philosophy, but no one has time for that. Instead, it comes down to simple phrases.
And sometimes those miss the mark.
On Monday, the first day of the 2019 legislative session, leaders in both the House and Senate tried to explain the need for extending the sales tax to more services. Senate President Stuart Adams said 40 or 50 years ago, people used to buy tools to do things they now pay others to do for them. He used lawns as an example.
“We used to buy our lawn mower,” he said. “Now we have our lawns mowed. Mowing of the lawn doesn’t have a sales tax related to it. But buying a lawnmower does.”
Therefore, the state should begin requiring lawn-mowing services to charge and collect sales taxes.
I suppose this is one of those things that depends on where you live. A colleague who lives in Salt Lake City told me many of her neighbors hire lawn services. I live in the suburbs and proudly mow my own grass on summer weekends.
Many of my neighbors do, too. Admittedly, I have seen how some people on my street hire a young man to do it for them, but that raises another question. If the state begins requiring lawn mowing services to charge tax, would that include teenagers with initiative who go around their neighborhoods looking for ways to make extra money?
When I asked House Speaker Brad Wilson that, he said, “We’re sure working on the details,” meaning no one yet has answers to such a question.
So, lawn mowing may not be the best bumper sticker explanation for what Republican lawmakers are trying to do with sales taxes. But then, what would be?
The need to charge sales tax when you visit the doctor? How about when you take your next Uber ride? Your next haircut? The tax preparation service you hire an accountant to do? Having your rain gutters cleaned by the neighborhood handyman?
The truth is, there probably is no easy bumper sticker explanation for this. That doesn’t mean it’s a bad idea.
Lawmakers and the governor say the state used to tax about 70 percent of transactions in the economy. Now it’s down to 40 percent. This isn’t just because some of us hire people to do our lawn. We stream movies rather than go to the theater. We don’t buy records or CDs any more. We stream them through services such as Amazon Prime. The list goes on.
The economy has changed in profound ways, and that has left the state vulnerable. Most of its general fund money comes from sales taxes. If the trend continues, the state eventually would have trouble fixing roads and providing other essential services.
In addition, recessions hit the sales tax hard as people quickly stop buying things. Spreading the tax to more services would reduce that blow a bit.
But the grand goal of all this tax reform is to extend the tax so far and wide that the state could lower its sales tax rate in addition to giving what might amount to $200 million or more in an overall tax cut.
That would mean paying less sales tax for everything that’s taxed.
That would be a great bumper sticker, right? “A big tax cut” is short and easy to understand.
Except that, if you suddenly have to pay a sales tax, even at a reduced rate, when someone cuts your grass, it won’t seem like a tax cut at all. It will seem more like a tax hike.
Senate President Adams summed it up well. “As you make any type of tax changes, this will be tough,” he said.
That is certainly true with sales tax reform, and it will be especially so as people show up to hearings to argue why taxing them would be bad for the economy.
Too bad there isn’t an easy way to explain it to them.