Flat Tax Proposal Likely Dead

Flat Tax Proposal Likely Dead

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SALT LAKE CITY (AP) -- A proposal to give Utah a flat-rate income tax is likely dead, a Utah state representing who supports the idea says.

"This tax reform can't make it without the support of the task force leadership and it doesn't have it," said a disappointed Rep. Greg Hughes, who sits on the Tax Reform Task Force.

At a meeting last week, task force members delayed a vote that would advance the proposal to establish a 4 percent flat income tax rate.

But Sen. Curtis Bramble, R-Provo, says the idea isn't dead. He says he's arranged for many of the issues stakeholders -- charities, mortgage interest advocates, senior citizens and others -- to testify at a Thursday hearing of the Tax Reform Task Force.

"We want a full discussion, especially by some groups that have an interest in these deductions but who have not been heard before," said Bramble.

A true flat tax has no deductions for historically cherished expenses like charitable giving, home mortgage interest and children.

The Church of Jesus Christ of Latter-day Saints last spring spoke out against repealing the current state income tax deduction for charitable giving. The church asks its members, who comprise the majority population in Utah are asked to tithe 10 percent of their income.

Church lobbyists have been quietly meeting with selected members of the 15 members of the task force. Church leaders don't oppose a flat-rate, but don't want to lose the charitable deduction.

But Hughes and others who advocate the flat rate say maintaining personal income tax deduction and adopts a one-rate system, the 7 percent tax rate -- which most Utahns pay -- might only be reduced to 6.5 percent.

"It wouldn't be worthwhile to bother with it," Hughes has said.

Hughes doesn't blame the waning interest in a flat tax rate on the Mormon church. Others have lobbied lawmakers to preserve their deductions. Hughes says legislative leadership is not supportive of the idea.

"Real reform like this needs consensus. And we don't have it," he added.

Hughes said he has no plans to a flat-rate income tax bill in the 2006 Legislature.

"Going rogue would not be productive," he said.

However, he believes something must be done with the current income tax system, including cutting revenues from the consistently growing state income tax. Utah had a record $170 million surplus in fiscal 2005.

"We should seriously look at reforming and trimming the income tax, because that is where all the growth is," Hughes said. "Simply put: People are paying too much income tax."

(Copyright 2005 by The Associated Press. All Rights Reserved.)

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