Tax task force recommendations are substantial

Several items this week concerning taxes and political fund raising.

First a comment on the work of the Legislature's Tax Reform Task Force.

Some are criticizing the 15-member panel, which includes Gov. Jon Huntsman Jr.'s chief of staff Neil Ashdown and state Tax Commission Chairwoman Pam Hendrickson, for not coming up with specific recommendations on the food sales tax and/or side-stepping some other major reform measures.

Actually, the panel has worked many long hours reviewing the state's complicated tax system. I can't think of one major tax or issue that they didn't discuss at one time or another.

Yes, special interests did play a role in the final recommendations (or non-recommendations, as the case may be).

But they always do in the Utah Legislature and always will.

The LDS Church said publicly — and lobbied privately and publicly — to keep the charitable deduction in state income taxes. A pure flat-rate tax has no deductions or credits for specific areas. And for a while several panel members, even Huntsman himself, was talking about a flat tax with no deductions.

But with 80 percent of the Legislature itself faithful members of The Church of Jesus Christ of Latter-day Saints, with many Utah Republicans (the majority party) also LDS, there was little chance that legislators would ignore the request from LDS Church leaders.

They didn't.

Huntsman's "flatter" income tax proposal included a 50 percent credit for charitable giving. That plan has morphed into Plan H3, a 5 percent flat-rate tax with credits for charitable giving, for home mortgage interest and large credits for households/individuals.

It's a significant change. (I'll let others decide if it is "reform.") And the task force recommends it.

The panel — for purely internal political reasons — didn't have a specific plan on removing the sales tax from food. Senate President John Valentine, R-Orem, pushes his plan; House Speaker Greg Curtis, R-Sandy, pushes his own plan.

No way task force members could (or would want to ) get in the middle of that heavyweight contest. So they just sent four different alternatives to the Legislature. Maybe that was a bit cowardly, but it was understandable considering personal political obstacles.

Perhaps the panel's largest failure — if one sees it like that — is that it did not expand the sales tax base.

Tax experts — and former Gov. Olene Walker and Huntsman himself — say that while Utah's tax revenues are growing at near-record pace, underneath those healthy collections the sales tax base itself is shrinking. And long-term that is bad for state and local governments.