Boom times keep rolling

Published: Thursday, March 30, 2006 9:53 p.m. MST
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In Utah, the economic good news just keeps piling up. Last week, the state Tax Commission forecast continued strong growth in sales-tax revenues. People are moving into the state, big retailers are setting up shop and people are spending more. St. George even ranks as the second-fastest growing metropolitan area in the nation.

All of which should give state lawmakers and the governor a little shot of boldness when it comes to tax reform.

The good times won't last, of course. They never do. But Utah's growth rate seems to be here to stay for awhile. And as long as revenues are robust, the time is right to make changes. Those include taking the rest of the state's sales tax off of unprepared food and passing the governor's flatter-rate income tax proposal.

The sales tax issue likely won't be taken up again until next year at the earliest, which is too bad. Lawmakers went only halfway this year, lowering the tax to 2.75 percent. That was a compromise devoid of any philosophical underpinnings. If the tax is bad, it's bad. But it cannot be only half-bad

Gov. Jon Huntsman Jr.'s income tax plan, however, is likely to be on the agenda of a spring special legislative session. It calls for dropping the state's top income-tax rate from 7 percent to 4.9 percent. We would prefer a more comprehensive tax plan, covering all state revenues, such as the one former Gov. Olene Walker prepared before leaving office. But such a thing appears to be politically impossible. This, in the meantime, is the best plan yet to be proposed.

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Like most states, Utah relies on three main sources of revenue, which comprise what often is referred to allegorically as a three-legged stool. These are property, sales and income taxes. Each has its advantages and disadvantages. Sales taxes, for instance, tend to be volatile and subject to sudden economic downturns. But a lower income-tax rate would give Utahns more money with which to buy items, which in turn would be likely to keep the sales-tax surge going a little longer.

How long will this economic boom last? No one knows, of course. But with big retailers such as IKEA poised to move in, and with tourism doing well, the end doesn't seem to be on the horizon. This is a great opportunity for the state to make tax changes it couldn't afford even in milder boom times.

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