Crunch time nears on tax-cut proposals
House Republicans seeking at least a $208 million break
Tuesday, House Republicans in an open caucus voted to give at least a $208 million tax cut this year — and there were a number of votes to raise that to $285 million.
Republican senators want tax cuts, too, but were caught off guard by the latest House proposal and won't even talk about it as a caucus until Wednesday afternoon. Even if the Senate majority is willing to accept the size of the House's tax cut, they're likely to balk at the details.
That's because the House is veering away from Gov. Jon Huntsman Jr.'s flat income tax package that's backed by the Senate in favor of a different approach and pushing for a reduction in the state's share of the sales tax on food, something that's unpalatable to many senators.
"Obviously, I'm going to have a tough time," Senate President John Valentine, R-Orem, said after meetings on the proposal with House GOP leaders and then the governor about the House proposal. "But it's not dead on arrival."
After the updated tax revenue estimates were revealed Monday night — another $149 million, including $77 million more in ongoing tax growth next year, on top of the state's current $1.6 billion surplus — Rep. Kevin Garn, R-Layton, said it makes no sense not to use the $77 million for tax cuts.
But GOP senators want to use all of the $149 million on one-time projects, including roads and buildings, Valentine said, because they're concerned that sources of the latest windfall are too volatile to count on continuing.
A caucus vote showed more than the 38 votes needed to advance a plan by House Majority Leader Dave Clark, a banker from Santa Clara in Washington County.
Clark suggests that the current flat-rate income tax be reduced from 5.35 percent to 5 percent. The current multideduction/exemption income tax would go from 6.9 percent to 6.7 percent. Taxpayers will pick which tax system costs them the least.
And the state sales tax on food be reduced from 2.75 percent to 0.75 percent.
Clark's plan would cost $208 million next year. He admitted that just reducing the flat-rate tax would help people in the upper income levels. However, reducing the old income system to 6.7 percent helps middle-income Utahns, and further lowering the food sales tax helps low-income Utahns, who spend most of their money on basic necessities.
Clark said his plan tries to bring together several tax reform/tax cut ideas.
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