Crawling toward tax reform
It was a grand vision that quickly fell apart in the crosscurrents of politics.
Now, Gov. Jon Huntsman Jr., has come up with his own version of tax reform. Only this one concerns just the income tax. It is a "flatter" tax designed to broaden the tax base and reduce the burden on most Utahns. Frankly, it does neither as well as Walker's plan would have, but a piecemeal reform may be the best way to get something through the political process.
Not that Huntsman's plan will survive intact.
The governor seems to have crafted a plan whose primary purpose is to make the highest tax rate 5 percent without sacrificing any of the revenue the state would receive under its current system. Beyond that, it's hard to discern any greater taxing philosophy or message about what government values.
For one thing, the plan allows exemptions for up to only five dependents. Typically, that would include two parents and three children. While we doubt the governor intended a tax system that appears to devalue large families in a state that has a lot of them, that is most certainly how this provision would be received.
The idea of a "flatter" tax is appealing, especially in a state where tax burdens are relatively high. This plan has the added benefit of being free from the harsh ideology of a true flat tax. It is progressive. Wealthier people would pay more, and lower- to middle-income people would be phased into the tax system. And there would be deductions allowed for charitable contributions.
The charitable contribution allowance is important. It represents a type of behavior that government ought to encourage through deductions, and this plan provides a more easily detectable benefit for those contributions than does the current one. The Church of Jesus Christ of Latter-day Saints (which owns this newspaper) lobbied for the inclusion of this deduction. But it is an important benefit that helps many organizations other than the church.
However, it will be difficult to fend off the real estate lobby and others who will argue, with some merit, that their industries provide benefits that also help government.
Economic development seems to be the over-riding theme of this plan. True, a lower tax rate would make the state more attractive, but there are many other factors as to why businesses may choose to stay away from this or any other state.
We wish the governor had presented a more comprehensive reform package. For example, Utahns need to re-examine whether the income tax is the best vehicle for funding public education. And we wish this plan was more clearly presented in terms of which Utahns would benefit, and which would see their taxes increase.
For many reasons, Utahns need tax reform. The governor's plan is a start. At least it keeps the pressure on lawmakers, who should avoid the temptation to do nothing.
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