"It was (an) easier (tax system) before we gave it to the Legislature" to draft into law, and politics got involved, said Prescott on Monday.

He said it is important to remember two things: First, don't make the mistake of using the 2007 hybrid flat-rate state tax system in 2008. And second, make sure you compare the actual tax you owe from 2006, 2007 and 2008 — not what you actually got back in a refund or had to pay.

"The withholding tables were wrong," said Prescott. And while many Utahns actually owe less state income tax in 2008 than 2007, because not enough was withheld, residents see less of a refund or actually have to pay.

Utah's flat-rate income tax was controversial from the start, and like any tax overhaul, there are winners and losers. To see the whole picture would take a full year, however, tax experts warned.

Teri Mueller, premium director for a local H&R Block tax preparer, said: "Most people are paying lower (state income) taxes than last year. But because of the withholding problem, their refund is between $50 and $100 less. And a few are actually having to pay tax this year when they didn't before."

She said, unfortunately, her office is also seeing a number of retired couples whose income is in the medium range paying "between $150 and $200" more because of the change in how retiree's tax is figured.

The flat-rate tax was always sold as a tax cut in general. In other words, overall it was a tax cut to Utah wage-earners.

But because of the economic recession in 2008, the withholding problems, and the new tax system, it is difficult to tell how each new ingredient is impacting the revenue losses.

The latest Tax Commission revenue collection report shows that personal income taxes are down $150 million for the first eight months of fiscal 2008-2009, which started July 1, from the previous year.

E-MAIL: bbjr@desnews.com