A flat-rate income tax, considered seriously by lawmakers several years ago, will make it appearance next week, Rep. John Valentine, R-Orem, says.
Valentine, a tax attorney in private life, will introduce three different flat-rate bills.The first is a true flat-rate tax - no exemptions, no deductions, no write-off for charitable gifts, no home mortgage deduction. Valentine says the rate will be "about 4 percent, plus or minus a bit."
The second alternative grants exemptions, as many as a taxpayer would take under the current system, and allows unlimited charitable gifts to be deducted. The taxing rate on that plan is 5.24 percent, he says.
The final option allows exemptions and deductions for charitable gifts and home mortgage interest. That rate is 5.41 percent.
Because Utah's income tax brackets haven't been indexed for inflation since the mid-1970s, Utah has a defacto flat-rate tax now. More than 75 percent of all taxpayers fall in the top bracket, with a taxing rate of just over 7 percent.
In 1987, the House approved a flat-rate tax bill that had no deductions for charitable giving. But after that approval, The Church of Jesus Christ of Latter-day Saints issued a statement saying that while church leaders didn't worry about members' donations, they wondered if eliminating the charitable deduction would have a chilling effect on other charitable giving. That bill died quietly in the Senate.