Special session may lay groundwork for January

Pignanelli: A twist of Shakespeare's King Macbeth oration offers the best description of the activity surrounding tax reform in the upcoming special session: "a tale ... full of sound and fury, signifying nothing." The proposed legislation has some merit by providing nominal re-bracketing that benefits all Utahns to the tune of $50 a year (much more is needed). But the proposition has the unpleasant odor of allowing $30 million of tax relief — through a flat rate of 5.4 percent — to wealthy Utahns who do not itemize. The real issue is that after two years of expensive and time-consuming efforts in the task force and prior legislative sessions, is this mediocre plan the best reform Utahns can get?

Although the legislative majority possesses some of the best brains on taxation (senators John Valentine, Curtis Bramble, Lyle Hillyard, Howard Stephenson and representatives John Dougall and Wayne Harper), initial desires to implement reform were overwhelmed by the inertia of not creating losers in the process. Conversely, the eagerness to provide an income tax cut in light of budget surpluses had been escalating for years. After the confusion of the last session, progress on tax changes remained in limbo. Through sheer will and personality, Gov. Jon Huntsman Jr. breathed life into something resembling tax reform (the dual option proposal) — thereby guaranteeing no losers but insuring an unbalanced tax cut.

The rationale behind the alteration is to assist Utah's economic development activities in recruiting out-of-state companies and executives. This is a worthy goal, but the legislation helps little in our competition with Nevada and Wyoming (which do not have income taxes). Supporters claim that other states may adopt plans similar to Utah's dual option. Is there any doubt? All politicians will embrace an activity that has winners and no losers.

The dual-option legislation will pass in the special session because, like generic food, it is not tasty but it is not completely offensive. (Of interest, and amusement, is that Utah will be rewarding wealthy individuals who do not make charitable and/or tithing contributions.) The real downside is that after the special session, there will be little appetite for substantive income tax reform for many years. A tremendous opportunity for wholesale reforms in income taxes and education funding has been abandoned. An important upside is that Gov. Huntsman has demonstrated leadership by an aggressive outreach to legislators and the public in compelling support for his agenda (albeit this mushy program). After "tax reform" passes in the special session, he can focus his skills on meatier endeavors.