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SALT LAKE CITY (AP) -- Plans for a "flatter-rate" state income tax are taking shape and legislative sponsors are looking at a larger tax cut that discussed earlier.
"We've decided to go a little bigger" on the tax-cut side, said Rep. John Dougall, the House sponsor of HB354.
The measure he detailed would set a 4.9 percent rate with various tax credits and would result in an overall tax cuts of $40 million to $60 million.
Earlier versions of the so-called "H3" measure supported by Gov. Jon Huntsman and a number of legislators would have cut taxes by $17 million to $23 million.
Legislators have more than $1 billion in one-time and new tax revenue growth, and most are expecting the revenue estimates to be announced next week will be even higher.
Most residents fall into the highest personal income tax bracket and pay 7 percent on earnings above $8,600 a year.
While Huntsman and legislative leaders have been talking for nine months about "reforming" the state income tax to make it simpler and flatter, some legislators are talking about just lowering the rates in the current tax system.
However, Mike Mower, Huntsman's deputy chief of staff, doesn't think that the reform idea is in trouble, and he believes support will build with discussion of the proposal.
Dougall believes the Senate is more inclined to support the reform proposal and the biggest battle over whether to change the structure or just cut taxes through lowering current rates will take place in the House.
An analysis of the new plan obtained by the Deseret Morning News concluded that the overall $60 million in tax cuts would mean most residents would receive a tax reduction, but some still would pay more.
Singles or bigger families heavily in debt through their mortgages and/or second mortgages would appear to pay more, while singles and smaller families who make charitable contributions would see tax breaks.
Sen. Curt Bramble, R-Provo, will carry his own version of H3 in the Senate.
The income tax part of that bill reflects Dougall's HB354. But instead of removing the sales tax from food at the cash register -- as Dougall's bill does -- Bramble would give a larger personal tax credit. He says that roughly could be compared to what the average person pays in food tax each year.
The House, through Rep. Merylnn Newbold's HB109, has already voted to remove the food tax at the register.
Senate Republicans spent much of their closed-door caucus Tuesday debating what to do about income taxes, but did not come to any agreement.
Senate President John Valentine, R-Orem, said they want to hear about Huntsman's plan from him or his staff before making up their minds.
They also will not decide on the food tax until the new revenue estimates are made next week.
Valentine says GOP senators may be willing to back away from the income tax credit plan and go with the House's full food tax removal if the new estimates come in $80 million or $90 million higher.
(Copyright 2006 by The Associated Press. All Rights Reserved.)
