Utahns can look forward to income tax cut

Huntsman then said he'd "educate" House members for a few months then call a special session for H3. But last spring state economists discovered an error in the estimated cost of H3. The cost wasn't $70 million (an amount put aside in the new budget for income tax reform). It was more like $220 million.

It looked like income tax reform was dead for 2006.

But busy minds got going. And Huntsman and legislative leaders decided that offering a dual-track system was the best.

First off, there were no losers. You just figured your tax two different ways starting in the 2007 tax year and took the best deal.

While it's true there are no losers, next week in special session lawmakers will be picking a flat-rate 5.35 percent system that will greatly benefit rich Utahns.

While $40 million will be spread this year among all taxpayers — with a married couple getting $48 — come the 2007 tax year only around 5 percent of Utahns will be better off in the flat-rate system and so will be splitting up $30 million.

A goofy-looking chart passed out to legislators, showing state taxpayers as small red dots, makes it clear that most of those picking the flat-rate system are Utahns making $80,000 a year or more.

The more you make, in most cases, the more you get in tax cuts.

Some rich Utahns will be paying hundreds, if not thousands, of dollars less by picking the flat-rate system next year.

Early in this debate, House Speaker Greg Curtis, R-Sandy, said he and a number of other House Republicans didn't like that. (All House members are up for re-election this November.)

And in the original H3 tax plan that died in the House last session, a phase-out personal exemption provision ameliorated that help-the-rich part of a flat-rate tax plan.

However, through his constant drumming that a lower tax rate will drive business moguls to Utah, making the state more competitive, the governor rallied his GOP colleagues.

Now the dual-track plan is headed for approval.

Some conservative legislators say come January's 2007 general session, large increases in Utah's income tax revenue could fund lowering the 5.35 percent rate. And as the flat-rate dips under 5 percent, the alternative flat-rate system will benefit more and more middle-income Utahns.

The wealthy will still get their benefits. But proponents say the new alternative will become a more politically acceptable system as regular Utah families see some flat-rate tax cut cash as well.

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Deseret Morning News political editor Bob Bernick Jr. may be reached by e-mail at bbjr@desnews.com