The Better UTAH Beat airs Tuesday afternoons on KVNU’s For the People. Podcasts of previous episodes are available here.
Here in Utah, the way we pay for public education is backwards. Right now, the more your family takes advantage of public education, the less your family has to pay for it. That’s because the amount you pay in state income tax, all of which goes to fund public education in Utah, is dramatically reduced based on the number of children you have. However, a state senator would like to see that change.
Senator Pat Jones, from the Salt Lake Valley, would like to see the income tax deduction for dependents eliminated. In other words, she’d like to see those who most use the public education system share a greater responsibility for paying for it. Her plan would result in a 400 million dollar windfall for public education and create some 10,000 jobs. It’s a jobs bill and an education bill all wrapped into one. And if Utahns are willing to look at the big picture, it might just work.
But why does the state of Utah provide a tax deduction for children in the first place? For the same reason governments provide any other type of tax deduction.
Deductions work as informal incentives. In other words, a deduction says something about what a government values. For example, if the government values clean air in the Northern Valleys in Utah, and research suggests that driving hybrid vehicles decreases the amount of dirty air, then the government could incentivize people to purchase a new Ford Fusion by providing some form of tax deduction. The deduction functions as an incentive by providing an economic benefit for buying the cleaner, but typically more expensive, hybrid car, thus reducing the overall financial burden of driving a clean air vehicle. What’s true for hybrids is true for children.
The state of Utah places a high value on childbearing and child-rearing. The tax deduction for dependents is the economic expression of that value. Utah rewards large families by reducing their tax burden. The unfortunate side effect of that value is that public education is devalued. But Utah could continue to place a strong value on childbearing and education even if it eliminated the deduction for dependents–it would just put a fair share of financial responsibility directly on those that benefit most.
Several other tax deductions would remain in place that still favor large families. For example, the mortgage deduction would still apply to state income tax returns. Larger families need larger houses, and so one could expect large families to receive some economic incentive from their child-rearing choices. And, to the extent that a particular religious denomination encourages large families, those families would still benefit from the deduction they get for charitable giving. In other words, eliminating the deduction for dependents would still allow the state to express its support for large families (via the home mortgage deduction and charitable giving deduction) while re-calibrating the relationship between who uses the public education system and who pays for it.
Both the childless and parents benefit from the state education system, but for too long, the childless in Utah have been forced to pay a disproportionate percentage of costs. Senator Jones’s proposal makes tax policy a little more fair. Those who are immediately taking advantage of the educational system should share the burden of financing that educational system. Senator Jones’s plan simply creates the expectation that all Utahns are responsible for ensuring a robust state education system.