More tax cuts? Huntsman says a $70 million slash is 'first step'

Economic growth will allow the state "to buy down the rate" — dropping the 5.35 percent rate to under 5 percent, making the flat-rate system more and more appealing, and Utah more and more competitive economically among Western states, Huntsman says.

A true flat-rate tax — like the alternative that Huntsman believes legislators will adopt next week — has no deductions for charitable giving and mortgage interest. But Utahns who want those deductions can stay in the current tax system, at least for now.

Last year, leaders of The Church of Jesus Christ of Latter-day Saints warned legislators that whatever kind of personal income tax reform came, the charitable deductions should remain part of the Utah tax system. Asked if church leaders had expressed any concerns over the current true flat-rate income tax alternative, Huntsman said: "No, none."

House Minority Leader Ralph Becker, D-Salt Lake, said Democrats will call a press conference today to detail their likes and dislikes. "Some Democrats will vote for the tax reform — mainly because indexing the tax for inflation is a big help," he said.

And nearly all of his caucus supports giving voters the choice of raising their sales taxes slightly for road and transit construction, Becker said.

Likewise, House Speaker Greg Curtis, R-Sandy, said he counts enough votes in his caucus for the tax reform and, with Democratic help, for transportation spending, also.

Can Huntsman get his "H3" plan in the 2007 Legislature? "If it still costs $220 million — no, I don't see all of that coming in the next (general) session," Curtis said.

Senate President John Valentine, R-Orem, said action to lower the flat-tax rate and further expand the income tax brackets for those taxpayers who continue to pay under the current system could come then.

"I would not be surprised in the 2007 session to see a move to do just that," Valentine said. "But it's going to be dependent upon the revenues. The revenue forecast has not been made, but revenue collections look positive."

But the governor isn't setting any time frame for when additional changes should be made.

"I'll let our economic performance answer that over time," Huntsman said. "I'm doing it not because I'm just kind of a senseless tax-cutter. I'm doing it because I really do believe in our competitive posture, longer-term."

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