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Tuesday, January 30, 2007

Flat, Fair and Simple

The Governor’s Office has begun to circulate a tax cut proposal. Call it a major milestone in the journey we started so long ago on tax reform.

This proposal lowers Utah’s optional flat tax rate to five percent.

It addresses concerns about retaining tax benefits for charitable contributions, mortgage interest, medical expenses, etc.

Here where it really gets good:

Under this plan, 80 percent of Utahns will probably switch to the flat tax. This is not another tax cut for the wealthy. 87 percent of those making between $5K and $25K per year will save money if they switch to the flat tax. 82 percent of people making less than $50K will save if they switch. 76 percent of those making over $50K will save if they switch. No one will pay more than they do now. (Those who won’t save can stick with the old system.)

Price tag: $110 Million.

At first glance, we think this makes a lot of sense. It's fairer, flatter, and simpler. It keeps us appropriately geared toward economic development and makes Utah more competitive. We'll be discussing this proposal in detail over the next few weeks.

For those who want to dig a little deeper, here’s some eye candy in PDF.

We’d appreciate your thoughts.

3 Comments:

Anonymous Wayne Niederhauser said...

I like this proposal but we might be able to improve it. I believe the cost for each percentage we cut from the income tax rate is about $30 Million. Why not cut an additional $15 million from the income tax (bringing the total price tag for this proposal to $125 Million)? That would lower the flat rate to 4.95 percent. It would be more fuel for the economic engine and could give the Governor another tool to help attract more top-quality business to our beautiful state.

1/30/2007 9:01 PM  
Anonymous Wayne Niederhauser said...

I like this proposal to the point that I am going to run the bill. For purposes of consistency and public education, my bill draft is exactly reflective of the charts included in this Senate Site post. However, I would still like to see the rate lowered to something under 5 percent. We'll work on that.

1/31/2007 7:48 PM  
Anonymous Marie said...

if we're making taxes flatter and fairer, we ought to make the benefits of government flatter and fairer at the same time. It makes no sense to tax everyone the same but give more benefits to one group than another, but I guess the "wealth" redistribution thing goes on whether it makes sense or not. I hope that the end result is not going to put/keep the biggest tax burden on the middle class ($40-70K), while continuing to subsidize whatever the low-income might pay, and "discounting" what the wealthier might pay and then calling it "fair".

2/02/2007 11:15 AM  

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