Lawmakers eyeing big tax changes
Utahns may soon pay 'flat' income, sales levies
You could have a flat-rate income tax with few or no deductions not even for charitable giving or mortgage interest.
And all over Utah you could pay the same sales tax rate whether you are in Park City, Sandy or Kane County.
"We can have a more simple and fair tax system," says Rep. Wayne Harper, R-West Jordan, co-chairman of the Tax Reform Task Force, a 15-member group that by November is charged with giving specific recommendations to Gov. Jon Huntsman Jr. and the 2006 Legislature.
The group will have preliminary recommendations in just two months and travel the state for public hearings the last week of October, says co-chairman Sen. Curt Bramble, R-Provo.
Harper and Bramble are recognized experts in the complicated tax field. Harper is putting together income and sales tax plans now; Bramble is formulating changes in property tax/redevelopment agency law, all to be reviewed by the committee the next few weeks.
Harper said he's working with other task force members to come up with a flat-rate income tax a rate around 4.9 percent or 5 percent and a single-rate sales tax of around 6 percent.
Currently, nearly all Utahns' incomes fall into the top income tax bracket, taxed at 7 percent.
And sales tax rates vary greatly depending in which locale you are buying, from 5.75 percent in some rural counties to more than 8 percent in other areas.
"We'd have just one sales tax rate of 6 percent across the state," said Harper.
Harper's flat-rate income tax would exempt from taxation the first $10,000 earned by a single person, the first $20,000 earned by a married couple. Taxpayers would only start paying tax on incomes over those levels.
Accordingly, a couple making $35,000 a year would have an effective tax rate of only 3.5 percent, Harper explained, while a couple making $75,000 a year would have an effective rate of 4.26 percent.
The Utah Taxpayers Association, a business-backed group, will suggest its own income tax reform, says Mike Jerman, UTA vice president. It will also be a flat-rate plan but one that phases out personal exemptions as the taxpayer makes more income thus giving a larger percentage tax break to lower-income Utahns, while making wealthier people pay a higher effective rate.
Like Harper's plan, the UTA option also would have no deductions for charitable giving or home mortgage interest. The LDS Church has already said this year that any state income tax changes should still keep the current charitable deduction.
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