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Thursday, April 13, 2006

Tax Reform Perspective

By John Valentine
President of the Utah Senate

Utah’s tax reform debate demands that two essential questions be answered.
1. SHOULD we reform the tax system?

2. HOW should we do it?
The first question considers whether we need a more stable tax system - with a lower rate and broader base - that is easier to calculate.

If the answer is YES, then we move to question number two and chart the exact route by which we can accomplish this. We need to decide which deductions will be eliminated and how much revenue reduction the state can afford.

Sometimes fierce discussion on the second question can eclipse the principles of the first. All of us fall prey to that in some ways. We need to remember that a logistical glitch doesn’t negate the overall principles and need for a better tax system.

Today’s news was that state economists made a “$35 million mistake.”

In other words, they predicted Senator Bramble’s 4.975% flat tax bill would cut income taxes by $70 million, when in reality it would cut your taxes by $105 million. Hardly the end of the tax reform process – but a serious consideration when we are trying to balance so many competing priorities.

This is one of several factors we need to address before tax reform can pass both bodies of the legislature.

Most states take ten years or more to construct meaningful tax reform. The fact that we are so close after only three years of work speaks volumes to the caliber of those who are actively involved in the process.

We need tax reform. We are laying the foundation for the next several decades of tax policy in Utah. If we need a little more time to work out the logistics and ensure that all parties are confident in the numbers and the process, then that will be time well spent.


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