03/06/2019
Did you know:
That the Utah legislature is on track to pass a major tax law early next week (March 13) for the purpose of taxing services, most of which have historically been tax free. You can find the law looking up Utah House Bill 441 here: https://le.utah.gov/~2019/bills/static/HB0441.html. This includes taxing people for just about everything, including haircuts, health insurance premiums, snow removal, photography, Uber rides, dating services, online media services, accounting services, and what matters most to us personally – legal services.
Pro-Say was formed for the purpose of giving more Utahns access to justice. Sadly, access to justice is usually code speak for “more affordable.” Taxing legal services completely cuts against what we are trying to accomplish. Have you ever heard anyone equate lawyer fees with words like “reasonable,” “sensible,” “economical,” or “nominal?” Neither have we… and that’s exactly what we are trying to make happen!
When people come to us (and most lawyers in general), they come to us because they NEED help trying to fix a really bad problem in their life. People rarely go to attorneys when life is good - they come to us as a last resort when they are down. People don’t like our fees either – our services are typically expensive! However, people will pay those fees because they have NO CHOICE when the alternative is losing custody of their child or going to prison. Throwing a tax on top of the high fees lawyers already charge is just throwing salt into their wounds. Not to mention, it will price out many people who have moderate to low incomes and can barely afford legal services as they already are… it’s also important to realize that it’s not just the extra tax the consumer has to pay, but also the higher overhead that gets passed along from the extra accounting fees we will incur for tracking and paying your taxes.
For these reasons WE HATE this proposed tax bill and want to display our disapproval. We would like to see it thrown out completely, but as an alternative, at least provide an exception to legal services – like they do with certain medical services.
Not liking this bill isn’t enough to get it thrown out though. In order to get our politicians to do something about it, we need to hurry and send them letters, emails, and make phone calls to let them know our feelings before they pass a final vote. You can go here to find your elected officials and their contact information: https://le.utah.gov/GIS/findDistrict.jsp
All of this said, it is important to note that part of this tax law will also include lowering income taxes (by 0.2%) and the base rate of sales taxes (from 4.7% to 3.9% to 3.1% eventually). Our politicians are selling this new tax overhaul as a “tax cut,” however, when we ran numbers for what we typically see as a standard family of 3 making $60,000 a year, we actually saw a mildly increased tax bill. As far as income taxes go, the 0.2% income tax cut equates to $120 a year of savings. As for the sales tax, we factored in the tax benefits that people will see from purchasing things like clothing, household supplies, and tangible gifts (“stuff”) vs. the tax hit people will see from paying taxes on services for things like vehicle maintenance, public transportation, entertainment, online services, child care services, health insurance premiums (1% tax increase), lawn care, haircuts, accounting fees, and legal services. Our calculations showed a moderate increase. All this said, we encourage you to run your own expenses and see where you fall to find out if this will help you or hurt you. That way you can really know for yourself how this tax plan will affect you personally.
My last question is why? By many accounts, we had a revenue surplus from last year. So, why would we add a tax to services all of the sudden? Only 3 other states do this, and the last state to try, Florida, repealed their law after 6 months. Why does Utah have to be so “progressive” when it comes to taxing its citizens? One of the reasons I enjoy Utah as much as I do is the financially responsible economics that has been in place, but this tax law feels like an attack on small service businesses and will hurt service businesses (and their customers) far and wide throughout the state. Is this really the best course of action to take raise tax revenues?
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