A group of Utahns unhappy with Gov. Jon Huntsman Jr.'s new 5 percent, flat-rate personal income tax will refile a citizen initiative next week seeking to return the state to what they call a "progressive bracket, variable rate" tax system.
The task before the RINGS TRUE Coalition is daunting, says attorney Lisa Watts-Baskin, a former lawyer for the Legislature who ran unsuccessfully this year as a Republican for an open Davis County state Senate seat and has been involved in a number of initiatives.
Also part of the group is Matt Frandsen, who ran for the Democratic nomination for governor but lost to Bob Springmeyer, and former state Tax Commission chief economist Doug Macdonald, among others.
Watts-Baskin said because the state Elections Office didn't like the legal wording of the group's original petition, she is submitting a thick rewrite of current state income-tax law, 40 pages long. The group will have more than a year to gather the 92,000 signatures of registered votes in 26 of the 29 Senate districts required to get a citizen initiative on the 2010 ballot. If the initiative gets on the ballot, and if it passes, Utahns would pay the 5 percent flat-rate tax in 2008 and 2009, and switch to the new tax system in 2010.
Huntsman and a number of legislators will, of course, oppose the initiative, should it get on the ballot. One of Huntsman's biggest political wins was a three-year effort to move Utah from what many called an outdated income-tax system of brackets and varying rates to a 5 percent flat-rate system that also includes deductions for traditional items like charitable giving and home mortgages. The new system took effect Jan. 1 of this year.
"It's unfortunate that there are still those who say the (flat tax) is not more progressive," said Lisa Roskelley, Huntsman's spokeswoman. "It is. A University of Utah study shows that. It is fairer, flatter and simpler and the right thing for Utahns."
But Frandsen, a retired engineer, says he and a number of economists have studied the new flat-rate system and believe it is "a huge tax break for the wealthy actually harms the middle class."
Supporters of the new system argue Frandsen and his backers don't understand how it actually works. They add that by greatly increasing aid for the poor, the flat-rate tax helps low-income Utahns.
The coalition disagrees. And should the initiative get on the 2010 ballot a long-shot, Watts-Baskin agrees there will undoubtedly be a complex, statistic-based public argument on who benefits or who is harmed by either system.
"We can prove that those in the top 1 percent of Utah wage earners will be getting a $50 million tax break a year," said Frandsen. He adds since Utah's public schools need 5 percent increases in funding a year to stay even with growing student enrollment, and since income tax goes to schools, to give a $50 million income tax cut to the wealthy makes no sense at all.
He added that Huntsman and Utah legislators, including a number of Democrats, did Utahns a disservice cutting taxes and adopting a new, untried income-tax system during years of budget surpluses only to have to now trim at least $200 million from state programs. (Huntsman announced Wednesday he's calling a special legislative session next week to deal with revenue shortfalls, only three months into the state's new fiscal year.)Talking points about the coalition's new tax plan can be found at utahtax.org.