Task Force Recommends Flat Tax With No Charity Deductions

Task Force Recommends Flat Tax With No Charity Deductions

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SALT LAKE CITY (AP) -- A task force subcommittee has recommended a flat income tax with no state deductions -- not even for charitable contributions, an idea that is opposed by The Church of Jesus Christ of Latter-day Saints.

The proposal calls for 4 percent tax on the federal adjusted gross income of all families.

The recommendation came out of the income tax subcommittee of the Legislature's Tax Reform Task Force on Wednesday. The task force is working on an overhaul of the state's entire tax system from sales to property tax.

Keith Prescott, a tax accountant who helped formulate former Gov. Olene Walker's initial tax reform proposal, said, "We need to do something. What we have is losing its integrity." The system has "Band-Aids upon Band-Aids," he said, because "We keep abandoning principles to raise rates."

"You have sold me," Rep. Greg Hughes told Prescott and moved to send the flat tax proposal to the full task force.

The flat tax form, with only half a dozen lines for financial information, could fit on a postcard.

"It's a very, very elegant system," Prescott said.

A study of selected 2002 tax returns indicated that a switch from the existing graduated rates to flat tax would make no difference or, in many cases, reduce the total tax a family pays, Prescott said. "It is very possible to make this system work without hurting anyone."

The building and real estate industry would likely be among opponents to elimination of homeownership deductions.

Prescott argued that studies have found no evidence that eliminating the deductions affects the housing market.

The Mormon church already has made clear its opposition to an elimination of charitable deduction.

"For the overall good of the citizenry, the state tax system should continue to provide tax deductions for charitable giving -- including religious contributions," the church said in a statement last month.

"Bam! We were in deep water immediately," Prescott said of the church's statement.

Sen. Curt Bramble, R-Provo, co-chairman of the task force and chairman of the Senate Revenue and Taxation Committee, believes the flat tax will not hurt church tithing.

"There is no evidence (in states and nations with flat tax systems) that it makes a difference to giving," he told The Salt Lake Tribune.

Bramble was quoted in a copyright story in the Deseret Morning News as saying that while the church's "input is appropriate as with any organization's input, there may be some difference in the level of influence" over what he described as an administrative rather than moral issue.

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

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