Utah taxes cut about $50

Legislators also agree to option hike for transit

As expected, the Utah Legislature in special session cut income taxes Tuesday and agreed to a local option sales-tax hike for roads, light rail and commuter rail.

Legislators raised no taxes. Voters county by county will decide if their local sales taxes are increased by a quarter-cent for transportation needs.

Special sessions often deal with fixing unintended mistakes made during a general session. But by all accounts, Tuesday's actions make significant changes to the state's income tax and transportation funding systems.

"This will provide tools to improve the state's long-term economic competitiveness and our transportation infrastructure," Gov. Jon Huntsman Jr. said, expressing relief that unfinished business of the 2006 Legislature is finally done. "Now it is time to continue, even redouble, our efforts to make education our single most important priority as a state."

After a few changes, lawmakers adopted a $78 million personal income tax cut over two years. And starting in 2007 Utahns can choose to pay a flat-rate income tax of 5.35 percent with no deductions, under the tax cut/tax reform measure lawmakers approved.

Lawmakers were still trying to figure out exactly how dropping the top tax rate in the current system from 7 percent to 6.98 percent would affect the size of the tax cut for middle-income Utahns.

Sen. Curt Bramble, R-Provo, said every Utah family now can expect to save about $50, with those earning more than approximately $60,000 getting a bigger tax cut. Before Tuesday's tweaks, all married taxpayers filing jointly would have received a $67 tax break. "Every taxpayer will be $50 better off," Bramble said, noting those who will see more "are the folks who pay the majority of the taxes."

Economists estimate 5 percent of taxpayers will pick the new flat-rate option, which overall is a $36 million tax cut. Some wealthy taxpayers may see hundreds, even thousands, of dollars in tax cuts, which grates on some Democratic and Republican lawmakers alike.

Huntsman says the lower flat-rate tax is needed for economic development — thoughts echoed by conservative GOP legislators.

But some lawmakers disagreed, insisting companies are more interested in relocating where they can find an educated workforce and a good quality of life. "People want to go to a place where they feel good about living," Sen. Patrice Arent, D-Murray, said.

Arent, who was among the seven senators — all Democrats — who voted against the income tax bill, also disputed the claim that all taxpayers will see a benefit.

"We're told everyone's a winner," she said. "The schoolchildren in Utah are really the losers here," she said, calling for the money to be spent improving public education rather than on a tax cut.

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