From Deseret News archives:

5% flat tax urged for Utah

No food-tax plan chosen; $100 million in total cuts

Published: Monday, Nov. 28, 2005 11:35 p.m. MST
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A recent Tax Commission report showed the state running an $85 million surplus in just the first four months of this fiscal year. The state could end the year with $300 million in surplus if tax collections remain strong.

In fact, the task force ended up recommending more than $100 million in tax cuts — even larger tax cuts if some of the "conceptual" tax changes are all given at one time.

The H3 alternative was approved without task force members being able to see how its different options affect various taxpayer groups — like seniors, single people or families in different income levels. Those numbers will come before H3 is reviewed by an interim study committee in January.

But several task force members and tax Commissioner Bruce Johnson said H3 is not much different than plans talked about for months — plans that have involved making income/family-size charts available to the public.

"The 5 percent level was picked to give a $23 million tax cut" to all taxpayers, Dougall said.

People who saw tax cuts under Huntsman's plan will still see them, just not as large. And fewer people will see tax increases under H3 than under Huntsman's plan.

If the Legislature and Huntsman decide to allocate $40 million or $60 million to income tax cuts, then that 5 percent rate could drop to 4.9 percent, 4.8 percent or lower, said Dougall.

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"And some people who would have seen slight tax hikes will actually see tax cuts instead," he said.

Unlike the sales tax proposal, the task force did support a statewide sales tax rate of 6.4 percent, which was proposed by Rep. Wayne Harper, R-West Jordan. The rate would include tax collections for the state, municipalities, counties and some boutique taxes.

Bramble said the deep review of the state tax system was commendable and is already successful.

"The basic premise of tax reform is that the system is drastically broken and it needs to be fixed. That was where we started," he said. "What we found was that there are a wide divergence of competing interests, and in many cases, our current system may be the best way to go."


E-mail: bbjr@desnews.com; jloftin@desnews.com

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