The state had more than $600 million in extra cash last year. Some was spent, some diverted to rainy-day savings accounts. Of the $106 million that was officially left over at the end of the fiscal year, June 30, about $80 million came from personal income taxes, said Urquhart, who sits on the Tax Reform Task Force, which must have specific reform recommendations by Dec. 31.

"And so we should cut the income tax, because that's where the real tax growth is coming." Curtis agrees.

And while there is some support and philosophical sympathy for a flat-rate income tax, said the speaker, "the political reality is that the flat tax is dead in the Senate."

"I'm a pragmatist. I see no sense in having all this bloodletting (over a flat tax) on the House floor just to send it upstairs (to the Senate chambers) for a burial," said Curtis.

"Right now, we in House leadership like the idea of just rebracketing the current tax" to give tax relief, he said. "Realistically, it has not been rebracketed in years."

By far, the great majority of Utahns' income (at least $8,626 for a married couple) puts them into the top tax bracket — 7 percent.

"If you rebracket from the bottom, you get more low- and middle-income people into a lower tax bracket" and they get tax cuts, said Urquhart.

The Legislature and Huntsman would then just have to decide the level of tax cuts — $40 million would be half of the income tax growth in fiscal 2005 — and rebracket accordingly to eat up that amount of money, Urquhart said.

That way you don't even have to debate whether to keep the current income tax deductions.

Said Curtis: The current system "has deductions for charitable giving, for home mortgage interest, for retired people, you get to deduct your property tax and half of your federal income tax. You get an exemption for yourself and dependent children. (In an election year) you really want to take on all those" long-held deductions? "Man-oh-man," get ready for a real political battle.

There are other kinds of tax reform that are needed and may be more valuable, Curtis adds.

Support for a true flat-rate income tax — which has no deductions or exemptions, but a much lower tax rate for all — began to wane this summer after The Church of Jesus Christ of Latter-day Saints came out against any state income-tax system that did not keep the charitable giving deduction. Eight of 10 Utah lawmakers belong to the LDS Church. Other non-profit entities, Realtors and advocates for the other income tax deductions and exemptions also are making their case to keep their tax breaks.

---

E-mail: bbjr@desnews.com