GOP to discuss dual tax proposal

Valentine said legislative leaders are also backing a $70 million cut. But some conservative lawmakers have talked about a bigger tax cut after the budget year ended June 30 with a record $351 million tax surplus, much of it in the personal income tax. One of the options under consideration would boost the income tax cut to $122 million.

Rep. John Dougall, R-Highland, one of the main proponents of a flat tax, told the Deseret Morning News that a single bill is being drafted to deal with income taxes and allow Salt Lake County voters to approve a small sales tax hike for mass transit.

The income tax part of the bill would allow Utahns to either jump to a new, flat-rate system or stay with the current progressive income tax. The current tax gives various kinds of deductions and exemptions, including deductions for charitable giving and home mortgage interest.

The flat-rate system wouldn't have those deductions but would offer a single rate of only 5.3 percent. The current income tax system would keep the top rate of 7 percent but spread out the income tax brackets so taxpayers would pay a lower tax rate on more of their income.

As for the transit tax hike, the Salt Lake County Council already has approved language for the November ballot asking residents if they want to increase their property or sales taxes to spend nearly $900 million on extending the TRAX light-rail system to the airport, Draper, South Jordan and West Valley City.

Legislative leaders would rather have a small sales tax hike than a property tax increase. But the county council can't raise sales tax, only the Legislature can give voters that option.

By combining both the income tax and transit tax issues into a single bill, it will be more difficult for dissatisfied Republicans and Democrats to break the two programs apart. With two different bills, the income tax reform/tax cut could be passed; the transit tax hike killed or vice versa.

In an election year, conventional wisdom would suggest that some legislators may want to give the income tax cut but not approve a possible sales tax hike. However, a recent Deseret Morning News/KSL-TV poll found that Utahns statewide were split over the proposed change in income taxes, while most Salt Lake County residents favored the transit tax increase.

The poll also showed that a majority of Utahns wanted lawmakers to wait until the 2007 Legislature to consider cutting taxes. And 42 percent of those surveyed by Dan Jones & Associates said they didn't want to see their income tax cut at all.

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