Deductions are likely in tax plan

Huntsman reportedly has adjusted reform package

Published: Tuesday, Oct. 11, 2005 2:31 p.m. MDT
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Some kind of deduction or credit for donations to charities is most likely part of Gov. Jon Huntsman Jr.'s plan to revamp the state's personal income tax, which is scheduled to be unveiled today.

Sources say the governor made charitable contribution allowances part of his reform plan after his private conversations with LDS Church leaders failed to weaken their opposition to removing such contributions from the current state income tax code.

Whether those will be partial or full allowances are among the details the governor has shared with only a few lawmakers, even though his group of experts has twice postponed appearances and are scheduled again today before the Tax Reform Task Force.

Huntsman's reform proposal includes a "flatter" income tax rate of between 5 percent and 5.9 percent, other sources said. The current top state income tax rate is 7 percent, which nearly all Utahns pay.

The governor, who spent much of Tuesday finalizing his tax plan, would only say that he was looking at taking the rate "two turns down" from 7 percent while helping low-income Utahns and maintaining some level of deductibility.

The plan deals only with personal income tax, he said, because "that is important enough right now at this stage in the discussion, with more perhaps likely to come." Huntsman said he will not appear before the task force but would hold a press conference afterward.

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Gary Cornia, a Brigham Young University business professor and one of three tax experts in Huntsman's so-called tax reform "brain trust," said Tuesday if all goes as planned, he and several other Huntsman advisers will present a plan that the governor believes is a "fairer and flatter" tax than is currently used. Cornia declined to be more specific.

Cornia was also a key member of former Gov. Olene Walker's tax reform panel, which ended up recommending two alternatives last December: a true flat-rate tax with no deductions and a flatter tax that kept deductions.

"One of the big differences in our work (with Huntsman) is that we have a full year more of income tax data to study and work with," said Cornia, through a confidentiality waiver signed with the Tax Commission. It allows access to all personal income tax returns in the state "without any names attached," Cornia said.

That allows Huntsman to know how his plan will affect all classes of people — single, married, married with dependent children, those taking care of older dependents in their homes, those itemizing, those taking standard deductions and so on.

Huntsman has said his focus is on lowering the state income tax rate to help boost economic development. He has said he'll give up trying to do away with the state's corporate income tax, after failing to win support from lawmakers last session.

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