Flattish Tax
The Governor's Office has backed away from a flat tax and, instead, proposes a personal income tax revision that it calls "flatter, fairer, and simple."
The proposal is not a flat tax. As I wrote a few weeks ago, it is difficult for governments to stick to (or enact) a flat tax, because of pressures for tax-favoritism brought by different sectors. This proposal has some winners (high wage-earners, charities and small families) and some losers (homeowners and big families).
With it not being a flat tax, I look to see if the proposal truly reduces the tax rate, which would be a good thing. By that, I mean a real reduction to the taxpayers, instead of simply masking effective rates by visibly dropping one number but quietly recouping the money elsewhere. As it currently stands, the proposal seems to fail on this point.
For many, the purported benefits under this proposal would be more than offset by the new burdens they would incur. Think of someone earning average wages but paying high housing costs (e.g., a policeman or teacher living in Washington County, where the average housing price is $235,000). Unless wage-earners at that level relocate far, far away, this proposal would represent an annual increase in their tax burden of somewhere between $800 to $2,000.
If we're just going to shift around the tax burden, this probably isn't the best place to point it. It already is problematic that we push teachers and policemen and others similarly situated to the outskirts of our communities with the lack of affordable housing. I worry that this proposal, by effectively increasing the amount they pay for housing, would shove them completely out of the communities they serve.
The proposal is not a flat tax. As I wrote a few weeks ago, it is difficult for governments to stick to (or enact) a flat tax, because of pressures for tax-favoritism brought by different sectors. This proposal has some winners (high wage-earners, charities and small families) and some losers (homeowners and big families).
With it not being a flat tax, I look to see if the proposal truly reduces the tax rate, which would be a good thing. By that, I mean a real reduction to the taxpayers, instead of simply masking effective rates by visibly dropping one number but quietly recouping the money elsewhere. As it currently stands, the proposal seems to fail on this point.
For many, the purported benefits under this proposal would be more than offset by the new burdens they would incur. Think of someone earning average wages but paying high housing costs (e.g., a policeman or teacher living in Washington County, where the average housing price is $235,000). Unless wage-earners at that level relocate far, far away, this proposal would represent an annual increase in their tax burden of somewhere between $800 to $2,000.
If we're just going to shift around the tax burden, this probably isn't the best place to point it. It already is problematic that we push teachers and policemen and others similarly situated to the outskirts of our communities with the lack of affordable housing. I worry that this proposal, by effectively increasing the amount they pay for housing, would shove them completely out of the communities they serve.
posted by steve u. at 10/11/2005
Subscribe
13 Comments:
I'm not terribly impressed with any of the Governor's recent proposals, including this one. Flat tax opponents have worked hard to portray the flat tax as a tax increase on those in lower income brackets. Unfortunately, I don't hear many proponents setting the record straight.
Are you aware of Rep. Dougall's proposal? He suggests a 4% flat tax against adjusted gross income. To address regressivity, he proposes a sliding scale credit based on income and dependents.
I like Rep. Dougall's proposal, but how are you going to get past the LDS Church's stand against eliminating exemptions for charitable donations?
It would be very difficult to overcome the opposition of charities to removal of the charitable deduction. It might happen in the House, but it would be extremely difficult in the Senate. And, if it were to make it through the Legislature, the Gov would likely veto it. But it's October; still worth pushing.
My guess -- though I should know better than to guess -- is that a pure flat tax fades (if it hasn't already faded), the Gov's proposal fades (if it hasn't already faded), and consensus starts to form around broadening the brackets and lowering the top rate.
This is not really a shocker to me. The Governor has said that he doesn't want to reduce tax revenue. And that's just what he has done. What really hurts is that he strikes at large Mormon families. I am surprised that the Church hasn't said anything about that. Especially since they have already made public comment about this tax reform.
This post has been removed by a blog administrator.
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.
http://www.givemeliberty.org/
.
Doug you need to be careful what nonsense you listen too, or you could end up spending 1-5 years learning the constitutionality of taxation.
Steve, I agree pretty solidly with your post. Most people I see would suffer with the current proposal. I like the sliding scale you mentioned the Rep. Dougall has proposed. Why has the state never considered any real meaningful tax credits that would benefit the average family? (The only credit I'm aware of is the at-home parent credit -- 100 bucks not too impressive)
P.S. Sorry about the mispelled words.
pramaphahil, what kinds of credits do you have in mind? Also, are you coming to the task force meeting Thursday night in St. George?
The fact that people are thrown in jail for this kind of thing doesn't make it right or moral. These people are pushing for changes that will benefit all people in the United States of America, whereas those promoting tax reform are simply trying to keep the people bound to the slavery that is taxation. Why must we work 1/3 of the year just to support politicians and most non-essential governmental programs? Why are we forced under threat of physical violence and incarceration to ``pay our taxes?'' Since when did the money we earn become community property? If you and I enter into a contract for wages, what business does the government have in taxing you? What happened to unalienable rights? On what moral grounds can you justify taking away someone else's money, and even life, by throwing them in jail for not paying taxes?
We don't need tax reform, we need tax repeal.
I'm having my wisdom teeth out that afternoon, so I likely won't make it. The other members of my firm are likely going to be there.
For example, I'd like to see a reasonable child tax credit (or other tax credits that represent a substantial long term tax break). Every year I see middle-class and lower-end clients (many single moms) get the tax breaks they need from the Fed, only to have to pay out more to the state of Utah. I believe a state child tax credit (e.g. 200+ dollars per child) would offer a meaningful tax reduction to a majority of Utah families.
The flat tax really wouldn’t represent a tax break for most individuals, it would simplify things – but that’s it. The system of deductions, exemptions, and credits is a very equitable system. Offer additional deductions or credits aimed at benefiting the state taxpayers as a majority, but don’t through the whole system out the window.
The governor's proposal seems like a cut for the rich, and a disguised hike for the average income Utah taxpayer. Don't get me wrong I feel that there should be some more tax breaks for the wealthy and fewer "screw the rich" provisions, but those breaks shouldn’t come at everyone else’s expense.
Ah to dream, Anon, ah to dream.
<< Home