Huntsman, though, told the newspaper that's not going to happen. "It's too complicated, with too many moving parts, to ever do in one fell swoop," the governor said. "I suspect we will continue to fine-tune the framework that has now been created over the next few years."

Tuesday evening, legislators adopted a "dual-track" state income tax system.

In 2006, income tax brackets will be expanded and the top 7 percent rate lowered to 6.98 percent, giving most Utahns about a $50 tax cut. Starting in 2007, citizens can pick an alternative 5.35 percent flat tax that has no deductions or exemptions.

Economists say about 5 percent of Utahns will get larger tax breaks by jumping to the flat-rate system — and the wealthier you are, the larger your tax cut. Some may get tax cuts of thousands of dollars.

"I was never a great fan of the dual-tax system," said Prescott, who was a key tax adviser to former Gov. Olene Walker and now serves as Huntsman's top tax man.

"But there is an open opportunity here" to really address Utah's cobbled- together tax system, Prescott told legislators.

True tax reform will mean further tax cuts, government leaders say. The state ran a $380 million tax surplus last fiscal year, which ended June 30. And now GOP legislative leaders say a new revenue report to be released today will show tax revenues for July and August are already 20 percent ahead of projections.

Huntsman and lawmakers can "lead us into a tax tragedy" by continuing to put band-aids on the old and new flat-rate tax system, said Prescott. "Or you can take this great opportunity, and in a single step you can give most Utahns a new flatter, simpler and fairer system, one that eliminated the federal income tax deduction" found under the current system and makes other critical changes.

Prescott said the best alternative is a variation on the "H3" flat tax that Huntsman pushed during the 2006 Legislature.

"We should have very broad tax brackets, with significantly lower rates" that would not contain deductions for charitable giving or mortgage interest.

Those benefits and deductions would remain under the current tax system, he explained.

But with much broader tax brackets and significantly lower rates, more — perhaps even most — Utahns would pay less tax under the reformed flat-rate system than under the current system, and so would switch, Prescott said.

"I've given this a lot of thought" ever since Huntsman's total switch to the H3 system failed in the Utah House the final night of the 2006 Legislature.

By keeping the old system as an alternative, special-needs taxpayers, like senior citizens on fixed retirement, large families with many kids or those who carry huge mortgages with high interest payments, could stay in the current system.