Tax reform isn't dead

Huntsman promises to continue to push plan despite numbers foul-up

Published: Thursday, April 13, 2006 11:58 p.m. MDT
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Gov. Jon Huntsman Jr. said Thursday he's not giving up on his income tax reform plan — despite a massive error in figuring its cost that led to the cancellation of a planned special session of the Legislature.

"Most people agree, in the Legislature as well, that this is good tax policy and this is what the state needs longer-term," Huntsman told reporters after a presentation on international issues at the University of Utah's Hinckley Institute of Politics.

He said he'll continue to push his plan — which currently would cut tax rates from a high of 7 percent to 5 percent while eliminating most deductions — even though the price tag has soared from $70 million to about $105 million as the result of faulty data.

That wasn't the governor's reaction in 2005, when lawmakers failed to pass another piece of his tax reform effort during his first legislative session in office. After seeing the Legislature reject what was a key piece of his economic development plan at the time, Huntsman just gave up.

Personal income tax, though, is a different story.

"I think we have a lot more in the way of public support and legislative support here," the governor said. "But what is important to me, as opposed to the corporate tax change, is that this is good for all of our citizens."

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If it wasn't, he said, "I wouldn't be wasting my time on it."

There are also political considerations. Utahns have already been told that legislative leaders and the governor agreed to a $70 million cut in personal income taxes as part of a compromise budget package negotiated during the 2006 Legislature.

Lawmakers, many of whom are up for re-election this November, failed to deliver. The plan had the support of the Senate Republican majority but stalled in the House in the final minutes of the session as members complained they didn't know enough about it.

Huntsman had been lobbying lawmakers ever since and had intended to force another vote at a special session he planned to call in mid-May. Wednesday, he made the surprise announcement that the session was being scrapped due to the change in the cost.

Legislative leaders were aware of the problem — which stemmed from Tax Commission data that counted $35 million in income from Utahns who earn money out-of-state, earnings that are exempt from state taxes.

But they were caught off-guard by the governor's decision to call off the special session.

Because Huntsman is saying nothing yet about whether he'll change his plan because of the error — and, if so, how — lawmakers who did support him are left in the lurch. Some are already wondering if they should come up with their own plan.

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Jon Huntsman Jr.

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