Make '06 Legislature one for record books
Bob Bernick Jr.
Utahns could see the largest tax cuts ever.
We could have "tax reform" that includes a flat-rate income tax, a single-rate sales tax, removal of the sales tax on food, various tax cuts/changes for businesses, even considerations of constitutional amendments that affect taxes and who pays them.
This could be the session where tax credits are given to parents who send their children to private schools.
Indeed, the political stars seem aligned for the next 45 days, resulting in the most important work in Utah's legislative history.
But will legislators put aside petty politics, special interests, even personal egos to actually grab this opportunity?
Around $1 billion in new revenue and ongoing surpluses provides the critical cash to achieve tax reform.
We get to this point, in part, because of good groundwork done by former Gov. Olene Walker, who in December 2004 released a comprehensive study of the state's tax systems, their strengths and shortfalls.
Three of the same fellows who helped Walker then stepped in to become Gov. Jon Huntsman Jr.'s main tax advisers/researchers.
Yes, special interests, including the LDS Church, have had their impacts on the tax study process.
Leaders of The Church of Jesus Christ of Latter-day Saints said early on that they expected any personal income-tax changes to include deductions or credits for charitable giving.
A true flat-rate income tax has no deductions.
But when Huntsman and GOP legislative leaders decided to accept the church's stand (the Legislature is 80 percent faithful LDS, as is Huntsman himself), they lost the power to rationally exclude other longtime, much-loved exemptions, like those for mortgage interest and the number of dependent children.
So the major personal income tax reform plan — called H3, since supporters say it is the third variation of Huntsman's original recommendation — is not a true flat-rate income tax, as some tax purists in the Legislature wanted.
Still, if adopted, H3 will spend much of that $230 million tax cut, and give by far most Utahns a tax reduction along the way.
The big-ticket item is removing the sales tax from food, which will cost the state between $150 million and $166 million. Another $60 million would be lost by local governments and special taxing districts, like the Utah Transit Authority.
Rep. Merlynn Newbold, R-South Jordan, says she will run a bill — backed, she believes, by most of the Republicans on the Tax Reform Task Force — that would remove all of the state's portion of the tax.
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