Income Tax
I need a little input here (on- or off-line, as you prefer). On the tax reform task force, I am co-chair of the income tax subcommittee. That would include personal and corporate income tax. Remember: according to our state Constitution, all revenues from these taxes go to education. Major things we are considering include a flat personal income tax and elimination of the corporate income tax.
Though it masquerades as progressive, Utah basically has a one-rate personal income tax (because the top rate kicks in at $4,300 for an individual taxpayer and $8,600 for a couple and because the rate is not indexed for inflation). Should we abandon the pretext of progressiveness and opt for an intentionally flat tax (doing away with non-mandated deductions and credits)? Of course, your answer would depend on the specific rate imposed; but what about the concept itself?
Corporate income tax generates around $180 million/year for the State (the number fluctuates greatly, depending on business cycles). The base for this tax is decreasing and it is a very difficult tax to assess and collect (think, for example, of multistate businesses). Many, including Gov. Huntsman, regard this tax as a business-killer. They argue that eliminating the corporate income tax actually could spawn economic activity that would bring good jobs (and with those jobs, increased tax revenues elsewhere). An opposing argument, no doubt, would be that this money would be taken from education, at least until any responsive increase is realized, and should be made up elsewhere.
UPDATE (5/27/05): As the D-News reports, the income tax subcommittee recommended Utah adopt a flat income tax. The proposal is that we start with federal adjusted gross income, exempt out a certain amount for all taxpayers (about $20,000 for individuals, $40,000 for couples filing jointly), and impose a flat rate on everything above that amount. We asked staff to find the rate that would leave revenues neutral. As I was quoted in the article, I believe that we should have a tax cut and I believe our citizens and our economy would benefit the most if the cut came out of the personal income tax. That decision, though, is one for the whole body to make. My hope would be that each subcommittee returns revenue neutral proposals and, from there, that the whole task force committee makes recommendations on specific tax rates.
Though it masquerades as progressive, Utah basically has a one-rate personal income tax (because the top rate kicks in at $4,300 for an individual taxpayer and $8,600 for a couple and because the rate is not indexed for inflation). Should we abandon the pretext of progressiveness and opt for an intentionally flat tax (doing away with non-mandated deductions and credits)? Of course, your answer would depend on the specific rate imposed; but what about the concept itself?
Corporate income tax generates around $180 million/year for the State (the number fluctuates greatly, depending on business cycles). The base for this tax is decreasing and it is a very difficult tax to assess and collect (think, for example, of multistate businesses). Many, including Gov. Huntsman, regard this tax as a business-killer. They argue that eliminating the corporate income tax actually could spawn economic activity that would bring good jobs (and with those jobs, increased tax revenues elsewhere). An opposing argument, no doubt, would be that this money would be taken from education, at least until any responsive increase is realized, and should be made up elsewhere.
UPDATE (5/27/05): As the D-News reports, the income tax subcommittee recommended Utah adopt a flat income tax. The proposal is that we start with federal adjusted gross income, exempt out a certain amount for all taxpayers (about $20,000 for individuals, $40,000 for couples filing jointly), and impose a flat rate on everything above that amount. We asked staff to find the rate that would leave revenues neutral. As I was quoted in the article, I believe that we should have a tax cut and I believe our citizens and our economy would benefit the most if the cut came out of the personal income tax. That decision, though, is one for the whole body to make. My hope would be that each subcommittee returns revenue neutral proposals and, from there, that the whole task force committee makes recommendations on specific tax rates.
posted by steve u. at 5/26/2005
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4 Comments:
I can’t tell you how it warms the cockles of my heart to see someone with the ability to do something about it write seriously about reducing tax burden. Yes, Virginia, there really are fiscal conservatives.
I can't tell you how disappointed it makes me feel that the government would defraud its citizens and steal from its citizens by way of an illegal and unconstitutional income tax.
In June of 2002, Bob Schulz publicly declared he has forever stopped paying income taxes or filing income tax returns, based solely on the content of this hearing and the government's refusal to answer the well documented legal charges that there is NO legal or constitutional basis for the federal income tax.
NO legal OR constitutional
Not ONLY unconstitutional but ALSO illegal.
What law requires me to pay the so-called federal income tax?
Show me the law.
http://www.givemeliberty.org
While, I completely support the elimination of the income tax, and I support a consumption tax over an income, property or other tax. I would push for a tax reduction before any tax realignment.
Also, I would encourage a falt tax without deductions for donations. However, if the Church doesn't support it that means it could die, if it doesn't have a deduction clause. So, I could support a flat tax with deductions. This is all assuming that a tax cut is included in both of these changes.
Travis,
I couldn't agree more. If we only shuffle around who pays the taxes, without minimizing the overall load of taxes, we will have failed. For Utah and Utahns to prosper, we need to decrease the tax burden. With the revenues it gets, Utah needs to do A, B, and C. But, first and foremost, it needs to lighten the saddle on the taxpayer by reducing that tax burden. If we do that, our little ecomony will gallop. And like magic, overall revenues (accumulated from the reduced percentage we take from you and your neighbors) will actually increase -- as opportunity and productivity increase. Please don't let us get out of next session without a tax decrease. For better or worse, legislatures are responsive organisms. We need to feel the demand and pressure for a tax decrease.
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