Income-tax cut urged

Cutting income taxes — the major source of money for schools — would grow the economy and ultimately bring more money to education, Gov. Jon Huntsman Jr. told the State School Board Thursday. But the board wants assurance that proceeds from such a plan would actually go to public schools — a promise the governor was not yet willing to extend.

Huntsman said he approached the State Board of Education to discuss money for schools, which he called a "most pressing concern." Utah spends less per student than any other state, despite a 10 percent spending boost last Legislature.

Utah's economy is humming, with increases in job growth and personal income, Huntsman said.

Lawmakers last session had an extra $1 billion to spend.

Lawmakers last year began examining tax reform and last winter approved a $70 million cut in the sales tax on food. Another $70 million remains on the table for income tax reform.

Huntsman wants to cut the income tax to make Utah more competitive with other states also trying to attract new businesses. He and lawmakers are examining several "dual tax system" proposals, which would let taxpayers decide if they want to stay in the current system or pay a flat tax.

"A stronger economy strengthens education funding," said Robert Spendlove, the governor's chief economist. "In other words, a rising tide raises all boats."

Spendlove said research shows high taxes hinder states from attracting new jobs and can encourage executives to pick up and leave, causing tax revenue losses. Utah's income taxes are fourth highest in the Western region, an area where a handful of states, including Nevada, have no income tax at all. Some states nationwide are cutting tax rates to attract and retain businesses in order to grow their economies, including Arizona, Rhode Island and Oklahoma.

The effect would be to attract new businesses to set up shop here, generating tax money for schools, Huntsman said.

"I don't want this to be seen as the governor's plan; I want this to be seen as everyone's plan," Huntsman said. "We can maintain the status quo and all be comfortable, and wake up in 10 to 20 years and find we've fallen off a cliff.

"All I'm saying is, take a look at what's on the table," Huntsman said. "Let's see if there's some ideas here we can all put our arms around."

Board chairman Kim Burningham said he agrees with the proposal's general philosophy.