When the Utah Legislature convened 44 days ago, Democrats promised a tough income tax fight, and some GOP leaders were talking about resurrecting the flat-rate income tax.
A day away from adjournment, little has been said about income tax reform, however, and both measures appear dead."We're going to try to lift our bill from (House) Rules Committee," promised House Minority Assistant Whip Grant Protzman, D-Ogden.
The Democratic bill would do away with the 50 percent deduction now allowed on state income tax returns for federal income taxes paid and doubles the size of the current income tax brackets.
The result is a tax increase on a family of four making $65,000 a year or more and a tax decrease on all other income tax payers.
While intended to be revenue neutral, it also raises about $8 million in extra revenue, money Protzman hopes will lead just enough Republicans to join the Democratic cause. "We could sure use some of that money in Human Services," he said. "They (GOP leaders) don't want to talk about a tax change that saves so many Utahns money, is fairer and provides the state with a little extra money it really needs."
But it takes a two-thirds vote on the floor to lift a bill from the Rules Committee, where GOP leaders have the Democratic plan bottled up, and it's unlikely enough Republicans will defect for that to happen.
Meanwhile, Rep. John Valentine, R-Orem, says his flat-rate income tax bills won't be debated this session.
Valentine led the fight for a solution to the AMAX property tax problem. That solution has apparently been found, but much later in the session than Valentine anticipated.
"There's just not time to get into the flat-rate tax thing now," he said.
The House and Senate have stopped bill committee hearings; all bills are going directly to the chambers' floors for action.
Thus, there would be no public hearing on the flat-rate tax bills, something probably needed for so drastic a change in tax policy.
A flat-rate tax would be one rate for all taxpayers, no matter how much money he or she makes.
Valentine had three bills - a true flat-rate tax that had no deductions for anyone or anything; a bill that allowed charitable and personal deductions; and a bill that would allow charitable, mortgage interest and personal deductions. As more deductions are allowed, the taxing rate goes up. But the final rate would still be well below the current rate of just over 7 percent in the top income tax bracket.
Valentine says lawmakers will study the flat-rate issue over the next year, and he'll reintroduce the bills in the 1992 session.
Utah has a mutated flat-rate system now. Because the income tax brackets haven't been adjusted for inflation since the mid-1970s, inflation has pushed three-fourths of all taxpayers - who pay more than 90 percent of the income tax - into the top bracket of $7,500 or more of income a year.
Thus, there really is no progressivity in the tax; that is, those making more money don't pay a higher percent in income tax.
Combine that de facto flat rate with the deduction given for federal income taxes, and Utah has a warped system, critics argue, because the more one makes the smaller percent of income goes to state income taxes.
In fact, the very well-to-do in Utah actually pay a smaller percent in state income tax than low- or moderate-income Utahns.
Both the Democratic and flat-rate income tax plans would end that break for the wealthy.