Most Utahns are paying less state personal income tax on their 2008 earnings, a review by the Deseret News shows.
But because of several miscalculations, many are not easily seeing those tax cuts. Worse, it appears that more Utahns than were originally believed are actually paying more tax following the 5 percent flat-rate income tax reform that fully kicked in last year.
And that is leading to increased grumbling by a number of Utahns as the April 15 income tax filing deadline looms.
Because the State Tax Commission instituted less-than-accurate withholding tables in January 2008, not enough money was withheld from paychecks. Thus, the impact of the new 5 percent flat-rate tax is different than originally believed, with many Utahns seeing a smaller tax refund or even taxes due as they prepare their 2008 income taxes.
And there are groups of Utahns, some higher-middle income or wealthy, that appear to be actually paying more. Many retired people are also seeing higher taxes, several tax preparers told the newspaper, due to the switch from a retired deduction to a retired tax credit under the new system.
Another problem facing Utah, when considering the flat tax, was this gigantic budget hole you may have heard a little about during the legislative session (who could have guessed that revenue was a necessary part of running a state, or that continuous back-filling of the budget via lesser noticeable taxes would not be enough?!).
I predict within 2 years (and would not be at all surprised if it happens as soon as the 2010 session) we’ll see a serious reappraisal of the flat tax, if not a complete move away from the policy entirely.
Sometimes what sounds great in campaign talking points and feeds the “anti-tax” populist notions of so many turns out to be just a really bad idea. It happens.
The Mormon church has used a form of flat tax for decades with much success.
To use a political axiom from 1997, I am not for a flat tax but a flatter tax.
I’m not so sure the LDS Church’s “flat tax” is that successful as I believe it uses its corporation arm to subsidize the members’ voluntary donations. But that is an interesting analogy.