From Deseret News archives:

Utah GOP leaders push tax cut plans

$115 million slash may be spread across board

Published: Tuesday, July 18, 2006 2:22 p.m. MDT
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That does away with one of the big political complaints of adopting only a flat-rate income tax: Some taxpayers who get special exemptions now, like senior citizens, could stick with the current system. And then there would be no "losers" who might have paid slightly more under Huntsman's original flat-rate plan.

Harper gives these key details on the new plans:

• A flat-rate system, in which 5.3 percent would be levied against a filer's federal adjusted gross income. To keep the wealthiest individuals from getting most of the tax breaks, lower-income individuals and families could take personal exemptions that phase out as income levels rise. There would be no deductions, however, for mortgage interest or charitable giving.

"We believe about 25 percent of taxpayers would benefit under that plan, and so would move to the flat-rate system," said Harper.

• Or, taxpayers could choose to stay in the current, graduated income-tax system. That group would still get to deduct mortgage interest, charitable giving and other exemptions that they have now.

The governor likes a variation that would drop the current top rate from 7 percent to 6.9 percent — so that all who stay with the current system would get a small tax cut.

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But Harper said he, Dougall and some other House members like a variation on Huntsman's plan that would keep the 7 percent top rate but spread out the brackets — thus giving tax cuts in a more even manner and drop more low-income people from paying any income tax.

The Harper/Dougall plan keeps the 5.3 percent flat rate but would also give flat-tax filers a $250 credit for individuals, and a $500 credit for married filers. That drops a "significant number" of low-income filers under that option, as well.

Huntsman's reform package would be, overall, a $74 million tax cut.

Harper said the GOP House modified plan could give tax cuts up to $115 million — and so is preferable.

Mower said Huntsman crafted his new plan to meet the already-approved $70 million income-tax cut. But considering growing state tax revenues, "the governor is open to the $115 million reduction" or some other amount, Mower added.

In the 2006 Legislature, the House and Senate agreed to give $160 million in tax relief — $70 million through reducing the state sales tax on food, $70 million in income-tax relief and $20 million in business-tax cuts.

But while the food tax and business taxes were reduced, on the last night of the session the House wouldn't go along with Huntsman's flat-rate income tax reform. The $70 million earmarked for that was put aside, but not actually given.

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