"Who does this benefit?" asked Doug Macdonald, head of Utah Issues, a low-income advocacy group. Saying he likes the food tax part, Macdonald, a former chief economist for the State Tax Commission, said on the income tax portion a low-income single mom with two children would get a small tax cut while wealthy Utahns would end up with big tax cuts.

The old income tax system would see on average a 1 percent reduction, while the new flat-rate alternative system would see an 8 percent reduction, said Macdonald.

HB123 would cut the top rate on the old multi-exemption personal income tax system from 6.98 percent to 6.9 percent. The new alternative flat-rate system's rate would go from 5.35 percent to 4.9 percent.

In addition, a "sales tax credit" on the flat tax would give single taxpayers a $237.50 credit, married folks a $475 credit. The credits would come out of the General Fund, which is fueled by the sales tax. The income tax rate cuts would come out of the Uniform School Fund, into which all income taxes flow.

Dougall said that the 6.98 percent reduction to 6.9 percent takes up about 40 percent of the tax cut, while reducing the 5.35 percent flat rate reduction to 4.9 percent takes up about 60 percent.

Sarah Wilhelm of Voices for Utah Children said it is clear that most low-income families would get a smaller percentage tax cut than wealthier families, which raises the question of how fair HB123 actually would be.

Tax Commissioner Bruce Johnson said the current two-tier system is "a political solution." Based on pure tax policy, it is a bad system, and efforts should be made to go to just the flat rate system and junk the old multi-exemption system.

But Rep. Greg Hughes, R-Draper, said no one believed there could be real tax reform a few years ago, yet today the state is on the verge of great tax relief and real reform. And the Legislature could complete reform with HB123 and other bills this session, he said.

House Republicans have already said they want $300 million in unspecified tax cuts this session. The Senate GOP caucus agreed Saturday they prefer $150 million in tax cuts that would further advance the flat-rate income tax reform.

Gov. Jon Huntsman Jr. put a $100 million tax cut in his $10.7 billion budget that would lower the new flat-tax rate to 5 percent and create a tax credit to encourage more lower-income taxpayers to switch to the flat rate.

Huntsman also endorsed the single statewide sales tax rate for food purchases in his recent State of the State speech.

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E-mail: bbjr@desnews.com