Utah lawmakers, mainly the majority Republicans, are trying to figure out whether to give a sales tax cut later this year or an additional income tax break.
Next week updated revenue projections for 1989-90 come in and maybe there'll be enough money to give both tax reductions.But with more than $50 million in so-called vital needs coming in over budget, it's unlikely lawmakers will give more than the $19 million tax cut Gov. Norm Bangerter recommends.
So, the battle between sales and income tax may well be waged.
And it will be an interesting political fight. Ideological and practical political lines are clearly drawn.
Most senators, almost all of them Republicans, want to increase the deduction allowed on state taxes for federal taxes paid.
Currently, you can deduct a third of your federal taxes on your state return. Sen. K.S. Cornaby, R-Salt Lake, and other senators want to increase that deduction to 50 percent of federal taxes paid.
While everyone who pays federal and state income taxes would get some benefit from raising that deduction, clearly the more federal tax you pay the greater the deduction on state taxes.
Accordingly, the wealthier you are, the more state tax break you get.
Democrats call it "the rich man's tax break," and are ready to make all the political hay out of it they can.
Meanwhile, House Republicans and Democrats want a sales tax cut. They reason this way:
Two years ago legislators raised the income, sales, cigarette and gasoline taxes, which set off the tax protest movement.
The income tax was reduced last year and a third of the federal deduction restored at the same time.
If taxes are to be reduced this coming year, it's the sales tax's turn to be cut, rather than giving an additional break on the income tax, House members say.
Bangerter hasn't said yet which tax he wants trimmed. But the governor was hit hard by big-time Republicans during last year's election about the income tax. Removing the federal deduction in 1987 meant that wealthier Utahns took a big tax bite; some saw their state income taxes quadruple.
While there's no hard evidence to prove it, Bangerter and other Republicans say the big hit on the income tax has harmed economic development, cooling a business owner's financial incentive to move an operation to Utah.
Some legislative watchers say the House's support of the sales tax cut and the Senate's support of the income tax break is a political ploy. If they can't agree on a compromise, they can spend the $19 million on state programs and tell their constituents they voted for tax relief, blaming the other house for killing a tax cut.
But such an argument won't sell with the public. Poll after poll shows that most Utahns don't hold the Legislature, as a body, in high regard. Utahns may like their individual senator or representative, but that doesn't extend to the Legislature as a whole.
If a tax cut doesn't come, the average citizen will blame the Legislature regardless of political games played by the House and Senate.
There's a week and a half left in the session. None of the major questions have been decided.
The tax cut issue will get a lot hotter over the next eight days.