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Tax reform will cause woes as economy sours

What he is advocating, a progressive income tax, is not new. The first modern economist/philosopher to do so was actually a two-some: Karl Marx and Joseph Engles.

Tax reform is not easy because even with a horrible tax the economy has learned to work with it, or around it. If you look at the relatively few systems around the world that have been able to create an ideal system from scratch, they have generally gone with a flat tax. And the amount of participation is quite high; far fewer people are cheating on taxes, so revenue has gone up significantly.

What this letter writer also fails to realize, while he laments the "reduced" tax base, is the dramatic spending increase that the Utah legislature has gone through over the past 4 years. Average voters used to moan about Mike Leavitt's 7-10% budget growth. Huntsman makes him look like a cheapskate. We have grown government at over 10% a year for the past 4 years!

Another way of looking at that, if we had the state budget from 2004 with today's tax revenues our surplus would be well over $5 billion+!!!


Taxes aren't keeping up with Huntsmans spending, shocker! Bush's either.

Unfortunately, the author presents a fractional and incomplete analysis of the tax reform. The volatility of the income tax was also reduced by the tax reform - meaning when things go sour, the tax will not decline by as much as it would under his multibracketed approach. The single rate income tax provides a fair approach to taxation integrating flat tax concepts with equity for the poor. It is also flexible, if the single rate drops or is increased, it will impact all taxpayers taxes by the same percent...

Frandsen mistakenly uses the concepts of effective tax rate (ETR) and marginal tax rate (MTR) interchangeably.

While both measures are important, ETR is the most important because it is the bottom line: taxes paid divided by income earned. If given the choice between a lower ETR or a lower MTR, everyone would chose a lower ETR.

Under the new tax system, ETRs increase as income increases. For example, high income households have higher ETRs than middle income households who have higher ETRs than lower income households.

Under the new system, MTRs increase during the phase-out range, but that is unavoidable with phased-out credits. According to Frandsen's logic, the feds should get rid of the Earned Income Tax Credit for the same reason because the MTRs with the EITC are even higher than under Utah's new system. In any tax reform, tradeoffs are inevitable, and in this case, higher MTRs are offset by lower ETRs, and since ETRs are more important than MTRs, the tradeoff is positive.

Frandsen proposes a top MTR of 10%, which would definitely give Utah one of the MTRs in the nation for high income earners and possibly one of the highest ETRs as well.

Frandsen's criticism of the phase-out credit is interesting since the ONLY beneficiaries of the phased-out credit are middle and lower income households. That's why the credits are phased out as income increases.

Is Frandsen advocating that ALL phased-out credits be eliminated because they cause marginal tax rates to increase while lowering effective tax rates?

There should never have been tax cuts. Our schools are suffering once again. We had one good year then back to where we were before.

Still last in the the nation.

what do you mean last in the nation? Our students test near the top. That means we're getting bang for the buck... something liberals have no notion of... just throw more money at it..... DC has the highest per pupil spending ... check out where they rank in test scores