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Tax Credits

and
Legislative Prerogative

POP QUIZ

What is the income tax rate


in the State of Utah?

Answer:

POP QUIZ:
HOW MANY TAX CREDITS
ARE ON THE BOOKS?

ANSWER:

(29 Personal Income, 19 Corporate)

Personal Income Tax Credits

Agricultural Fuel
At-home Parents
Capital Gains
Clean Fuel Vehicle
Employing Persons Who Are Homeless
Combat Related Death
Enterprise Zones
Farm Operations Hand Tools
Gold and Silver Coin Sales
Health Benefit Plan Premiums
Historic Preservation
Income Tax Withholding
Live Organ Donation
Low-income Housing
Medical Care Savings Account
Mineral Production Withholding

Pass-through Entity Withholding


Recycling Development Zones
Renewable Energy Systems
Research Activities
Retirement Income Tax Credit
Sheltered Workshop
Solar Project
Special Needs Adoptions
Targeted Business
Taxes Paid to Another State
Taxpayer Tax Credit
Utah Educational Savings Plan
Veteran Employment

Corporate Income Tax Credits

Clean Fuel Vehicle Tax Credit


Enterprise Zone Tax Credit
Low-income Housing Tax Credit
Recycling Market Development Zone Tax Credit
Credit for Research Activities
Credit for Machinery and Equipment Used to
Conduct Research
Utah Municipal, U.S. and Agency Bond Interest
Credit
Previous Pass Through Withholding
Motion Picture Production Tax Credit
Renewable Commercial Energy Tax Credit
Targeted Business Tax Credit
Pass Through Withholding
Economic Development Tax Credit
Technology and Life Science Tax Credit
Mineral Production Withholding Tax Credit
Agricultural Off-Highway Gas / Undyed Diesel Fuel
Tax Credit
Farm Operation Hand Tools Prepayment

POP QUIZ:
HOW MANY $$$ IN
TAX CREDITS WERE ISSUED
IN 2014?

ANSWER:

$635.4M
($137.4M Personal Income, $498M Corporate)

Appropriations

SOMETHING IS MISSING
Tax Credits Dont Appear In The Budget
Credits Not Discussed at Appropriations
Meetings
Credits operate mostly out of sight of the
legislature
History of specific credits and policy are murky
in the mind of most Legislators

EXAMPLE:

Medical Savings Plan


Tax Credit

Medical Savings Plan Tax Credit


Instituted in 2009
Affordable Care Act made obsolescent
ACA implementation in 2012 eliminated need
for MSP Tax Credits

Total Utahns Claiming


Medical Savings Plan Tax Credit
1,600

1,400

1,200

1,000

800

600

400

200

0
2009

2010

2011

2012

2013

2014

2015

WHOOPS!

UTAH TAX COMMISSION:


100% of MSP Tax Credit Claims
have been found to be fraudulent or
made in error

Utah Tax Commission


Votes to Repeal

THE SOLUTION
HB170: Medical Care Savings Account
Tax Credit Repeal
A great bill. Everyone should vote for it.
Rep. Jeremy Peterson

EXAMPLE:

SOLAR PROJECT TAX CREDITS

SOLAR MARKET MATURING

UTAH SOLAR PROJECT TAX CREDITS


Non-Refundable Renewable Energy Tax
Credits (Individual)
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
2007

2008

2009

2010

2011

2012

2013

2014^

Is it time to remove
the tax credit training wheels
from a maturing industry?

HB327 - Energy Tax Credit


Amendments
4-year fade out of Solar Tax Credits
1st Year No change
Credit reduced $500 per year until ended in
2021

Missed Opportunities
MSP - ACA implementation impacted Tax
Credit and subverted Legislative intent
MSP - Fraudulent and erroneous claims could
have been brought to Legislatures attention
Solar Market Shifts could be anticipated and
policy adjusted accordingly

THE SOLUTION:
HB310
TAX CREDIT
REVIEW AMENDMENTS
Its awesome! Rep. Jeremy Peterson

HB310: Tax Credit Review Amendments


Provides rolling 3-year review of all tax credits
Dedicated presentations to Interim Revenue
and Taxation Committee
GOED Tax Credits will be presented in
conjunction with LFA for analysis and insights
Will provide institutional knowledge for
generations of Legislators into the future

Q and A

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