70,000 Utahns to see healthy tax cut in '09

More than 70,000 Utah taxpayers will see a healthy tax cut next year, legislative leaders are saying.

But since not all Utahns will see the income tax break, leaders aren't selling it as tax relief. Rather, it is called "health-care reform."

Still, those families (140,000 souls altogether) will see between $150 and $500 a year in savings — no small amount for some of Utah's more moderate-income families.

Gov. Jon Huntsman Jr. and House Speaker Greg Curtis, R-Sandy, said Thursday that even though there is less tax revenue than lawmakers hoped for, there will still be enough to fund any one of several bills aimed at giving self-insured Utahns a tax break on their health care premiums.

If you paid $300 a month for health care yourself — not as part of your employer's plan — you would see a $180-a-year tax cut.

If you had a larger family, with some kids or adults with health problems, and you paid $700 a month in health care premiums, you'd see a $420 tax cut.

"For some people, the financial cost" of buying a separate, non-employer health care plan "does make a difference" on whether a family buys health insurance or takes the risk of going without coverage, said Rep. Jim Dunnigan, R-Taylorsville, an insurance agent who has become the Utah House's insurance expert.

Dunnigan has a bill, which has already passed the House, that would allow self-employed Utahns, or Utahns who may be working for a firm that provides no health care, to purchase health insurance with what's called "pre-tax" dollars.

That is, a family or individual would not pay their 5 percent Utah state income tax on the income they use to pay health insurance premiums — as they do now.

That tax break is anticipated to cost state coffers $18 million next year, and $18.7 million the next year.

"But it is only fair," said Dunnigan, to let all Utahns who are buying health insurance to get the same state personal income tax break.

Dunnigan's tax cut is also reflected in an umbrella health care reform plan in a different bill sponsored by House Majority Leader Dave Clark, R-Santa Clara. Clark's bill also costs the state $18 million.

The Utah State Tax Commission estimates that there are more than 70,000 individual tax returns where the taxpayer is buying his own health insurance but can't take the pre-tax deduction as can workers whose employers have health insurance or whose employees buy into a special group plan organized by their employer.