From Deseret News archives:

Slow going on tax cut

Published: Wednesday, July 19, 2006 11:53 p.m. MDT
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Four proposals for cutting state income taxes by as much as $113 million were presented to lawmakers Wednesday, but Utahns may not see any reduction in time for the next tax year.

That's because lawmakers appear to have little enthusiasm for tackling the tax issue in a special session of the Legislature. Unless action is taken by the fall, it is unlikely that any changes could be made to the tax system quickly enough to apply to 2005 earnings.

"There's no sense of urgency," said Senate Majority Leader Pete Knudson, R-Brigham City.

The latest projections from the Tax Commission, released Wednesday, show revenues continue to pour into the state at record rates, with $350 million more than budgeted now expected to be collected. About $275 million of that is coming from individual income taxes.

But neither the House nor the Senate GOP caucuses discussed the four so-called dual income-tax options detailed earlier in the day at the Legislature's Revenue and Taxation Interim Committee.

The committee heard the proposals, which would allow taxpayers to choose between variations of the current tax system and a flat tax, but deferred any decisions until their next meeting in September.

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Even Gov. Jon Huntsman Jr. has put off choosing which — if any — option he prefers. "The governor is not endorsing any specific tax proposal at this point," his chief economist, Robert Spendlove, told the committee.

Huntsman's spokesman, Mike Mower, said Wednesday that the governor is "very open to holding a special session dealing with tax reform," but only if lawmakers are ready for it. It would be up to him to call lawmakers back into session and set their agenda.

Senate President John Valentine, R-Orem, said that "even though I would like to see personally the income tax cut occur right away, it appears our bodies are very anxious to do this in a very methodical way."

Valentine said lawmakers are getting tired of being pressured to deal with issues before the next general session of the Legislature, which will begin in mid-January 2008. "You can only cry wolf so many times," he said.

Last session, lawmakers deadlocked over how to deliver a promised $70 million income-tax cut backed by Huntsman. The governor announced he would bring them back into special session to try again, but had to drop those plans when a multi-million dollar error was discovered.

Since then, various plans have been discussed. The latest proposals incorporate the most popular idea, allowing taxpayers to stay within the current tax system or apply a single tax rate to their adjusted gross income.

The variations include reducing the existing top rate from 7 percent to 6.9 percent or adjusting the tax brackets and keeping the top rate the same. Those opting for either variation of the current system would continue to be allowed the same deductions and credits.

In the case of a flat tax, the options would allow applying either a 5.25 percent rate without deductions, or a 5.30 percent rate with a "filing status credit" of $500 for a married taxpayer or $250 for a single, head of household or married taxpayer filing separately.

The backers of the new proposals, Rep. Wayne Harper, R-West Jordan, and Rep. John Dougall, R-American Fork, both were unwilling to predict whether a special session would be held to consider the tax cut.

"We're not rushing it," Dougall said. "We're going to take our time."


E-mail: lisa@desnews.com

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