LDS Church not offering opinion on flat-tax issue

While Gov. Jon Huntsman Jr. and other state tax reform advocates may be giddy at the hope that a $100 million tax cut can "finish" income tax reform in Utah, one large player has yet to be heard from — the LDS Church.

Huntsman told the Deseret Morning News' editorial board Tuesday that since informing leaders of The Church of Jesus Christ of Latter-day Saints and leaders of other major churches in Utah about his "dual track" income tax plans last spring, he has not contacted or heard from the state's dominant church on the flat-tax issue.

Huntsman's $100 million tax cut/reform plan outlined by the governor Tuesday could run afoul of LDS Church leaders' single asked-for criteria: that whatever tax changes take place, Utah's personal income taxes still allow for a charitable giving deduction.

Asked if church leaders had concerns about Huntsman's expanded tax reform plan, LDS Church spokesman Dale Bills said Tuesday night: "The church is still reviewing Gov. Huntsman's proposal, so I cannot comment on specific elements of his plan.

"On the question of tax deductions for charitable donations, the church continues to believe that the Utah personal income tax system should contain an incentive for charitable giving."

And there's the rub.

For while the dual track system would still give taxpayers the option of staying in the current, multibracket, multideduction system — which gives a deduction for charitable giving — under Huntsman's new reform package around 60 percent of Utah taxpayers would opt for the new flat-rate income tax system — because the governor's tax cuts under that new plan would save them money. And the flat tax has no charitable deduction.

The original flat-rate system, adopted in a special session last summer, had a 5.35 percent rate with none of the historic exemptions, credits or deductions. In 2007 it would have led maybe 5 percent of taxpayers — mostly wealthy Utahns — into the new flat-rate system.

Now upward of 60 percent of Utah taxpayers will move over to the new flat-rate system.

Thus the question of how LDS Church leaders will react to that change.

"It is a good question," Huntsman told the newspaper's top editors when asked about it Tuesday afternoon.

Huntsman said leaders of various churches in the state didn't have a problem with the dual track system as proposed last spring, but he hasn't heard if there are any concerns now that the new dual track system will lead a majority of taxpayers into the noncharitable deduction plan.