Senior citizens whose primary income source is Social Security were dealt a financial blow Thursday, when the Senate Revenue and Taxation Committee opted not to advance legislation that would remove the tax on such income along party lines.
SB 57 – Taxation of Social Security Benefits from Senator Todd Weiler (Republican – Woods Cross) would have cost the state just over $1.2 million annually as low income seniors and those receiving Social Security benefits hang on to more of their income.
Weiler noted that Utah is only one of 13 states that actually tax Social Security benefits, and that our neighboring states such as Nevada and Arizona don’t have such a tax.
“I am tired of getting emails from senior citizens saying ‘why does Utah hate senior citizens?’ And when I first got those emails I kind of thought ‘well that’s ridiculous’ but, as I research this, there is actually some merit to that.” Weiler explained to the committee.
Weiler also added that while working, we are already taxed on Social Security and for the state to tax the income post-retirement is akin to double taxation on the states part. As a reminder, Weiler also told the committee that Social Security is an earned benefit, meaning that if you don’t work, you are not able to take advantage of the benefit.
Senator Curt Bramble (Republican – Provo) appeared to take some umbrage at the proposed legislation and was quick to remind the committee that he is a CPA and has practiced for nearly 40 years.
“What we are really talking about is taxpayers contributing half of their Social Security cost from their paycheck because their employer pays half and gets a deduction, so [employees] are not paying tax on half of their contributions, not on 100 percent of their contributions,” Bramble told the committee, adding that those at extremely low incomes are already exempt from state and federal taxes on Social Security benefits.
Bramble went on to defend the current tax structure, noting that changes in the tax structure to implement the current flat tax required some moving and shifting with the Social Security taxation – adding that they considered the impact such changes would have on the very poor who collect Social Security.
Bramble concluded by stating that Weiler’s bill would “erode” the steps made during the 2007 tax reform debate.
Senator Jim Dabakis (Democrat – Salt Lake City) appeared bothered by Bramble’s resistance to helping the small population of Social Security recipients who would benefit from the tax change.
“This committee regularly sees it fit to set up special interest tax credits or sales tax exemptions, or special projects brought by lobbyists for corporate interests…I’m comfortable carving out…help for this small group of people. If we are involved in any special interests, it ought to be to help these seniors,” Dabakis countered.
Ultimately, Senators Bramble, Deidre Henderson (Republican – Spanish Fork), and Wayne Harper (Republican – Taylorsville) voted against the the bill, resulting in the bill not making it out of committee.