2 sacred cows in tax cross hairs

A bipartisan income tax "reform" bill now being put together in the Utah House combines two previous sacred tax cows: big families and big shots.

And it's unclear now if the political will is present to knock those issues aside this year.

Reps. Steve Mascaro, R-West Jordan, and Pat Jones, D-Cottonwood Heights, at least can't be accused of thinking small in finding a way to pump more money into public education.

Monday afternoon the pair decided to combine their previously introduced income tax bills in yet another way. "This is a whole new way, a whole new philosophy, in handling income taxes in Utah," said Mascaro.

While the proposal is not finished, the two lawmakers are considering three things:

• Lower all tax rates by 0.1 percent. The top bracket rate would go from 7 percent to 6.9 percent.

• Rebracket the income tax. The highest rate would kick in at $16,389 of income instead of $8,626 where it now kicks in.

• Repeal both the current 50 percent deduction for federal taxes paid and the dependent child credit for children living at home.

Under the proposal, a family of two parents and two children making $45,000 a year would see their state income tax go up by $87 a year, said Mascaro. "A small price to pay to better educate their children," he adds.

Families with more children and/or more income would see their state taxes go up more — in some cases hundreds of dollars more.

Overall, the bill would generate $90 million more into public and higher education. It would also ding two sacred cows of Utah income tax policy: families with a lot of children and people who make a lot of money.

"This bill makes Utah income taxes more fair. It makes those who use the schools pay for that use," said Mascaro.

Jones, who started the 2003 Legislature with just a repeal of the dependent child credit to give $90 million more for public and higher education, agrees.

But the question remains whether legislators are ready to buy into such a large change. "My e-mails are telling me Utahns are," says Mascaro. "People have to understand this is more than just the child deduction, more than federal tax deduction. It makes the whole system more fair."