This is an archived article that was published on sltrib.com in 2005, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

After weeks of hinting, Gov. Jon Huntsman Jr. and his team of tax experts unveiled plans for a ''flatter, fairer, simpler'' income tax Wednesday - one they say would mean a tax cut for most Utahns.

Huntsman's proposal would cap the top tax rate at 5 percent, down from the current 7 percent. But it would allow deductions for only a limited number of dependents and provide a tax credit - but not a full deduction - for charitable donations. His formula would eliminate Utah's income tax deduction for home mortgage interest.

At the same time, the governor claims his income tax equation - which could be computed on a postcard-size form - would simplify Utah's tax structure and protect low- and middle-income families while boosting economic development with an overall tax cut and establishing a "predictable, reliable" flow of revenue for schools.

"You'll need one line of instructions to do your taxes, maybe two," said Huntsman adviser and accountant Keith Prescott. "It will be simple. It will be transparent."

Families, which now can claim unlimited dependent exemptions, would be capped at five.

For a family of four, the first $28,000 of income would be tax-exempt. The top tax rate of 5 percent would not kick in until that family's income reached $70,000. At that point, the family could claim a tax credit for about half of their charitable giving. In the next few days, taxpayers will be able to plug their income into an online calculator on the governor's Web site at http://www.utah.gov and figure out their tax bill under the proposed formula.

Huntsman waded into the tax reform debate just as it seemed the idea of a flat tax was dead following formal opposition by top leaders of the predominant LDS Church to any proposed elimination of the deduction for charitable contributions.

His biggest concern is the 150,000 new students expected to enter Utah schools in the next 10 years. the Utah Constitution ties public education funding to constantly changing income tax revenue. With regular fluctuations in the state's economy, that leaves state leaders scrambling to figure out how much they can spend on schools.

"It becomes very difficult to budget," Huntsman said. "We're going to need a more predictable and reliable flow of revenue."

In addition to making education funding more stable, the governor and his advisers expect a corresponding increase in economic development. Utah's current 7 percent top income tax rate is 16th highest in the country. Huntsman's 5 percent rate would put the state at 35th - lowest in the West except for Colorado, Nevada and Wyoming. Many states and European countries are adopting lower tax rates in an effort to boost business development, said Gary Cornia, a Brigham Young University tax expert and Huntsman adviser.

"We need to be in step with the rest of the world on this," he said.

There are parts of Huntsman's plan that might provoke some state power brokers - specifically changing Utah's so-called "tithing" deduction into a partial tax credit, cutting the mortgage interest deduction and limiting the number of exemptions for dependent children.

Three weeks ago, the governor's team was prepared to present a proposal for a flat 4 percent tax. But they pulled back when an attorney for The Church of Jesus Christ of Latter-day Saints made a rare public appearance before a legislative committee to issue a statement in support of retaining deductions for charitable giving. Huntsman's advisers reworked their numbers to include a tax credit for tithing and other donations to nonprofit organizations. The governor said he met with members of the LDS Church as well as other faiths and nonprofit groups to present his idea.

LDS Church spokesman Dale Bills said Wednesday that he could not comment on the governor's proposal.

Capping dependent exemptions also could be an obstacle with conservative Utah lawmakers, many of whom have big families. Huntsman advisers got a preview of what is likely ahead as members of the Tax Reform Task Force grilled them on the point. Prescott noted that in 2003, 87 percent of Utah families claimed four or fewer exemptions, refuting the "myth of the large Utah family." Without a limit on exemptions, the governor's tax rate would go above 5 percent - an increase Huntsman plans to fight.

"We're running the economics of tax policy, rather than the politics of tax policy," Huntsman said. "We're doing it based on the numbers."

But lawmakers warn that the so-called myth is based on reality and could snag Huntsman's tax plan in the 2006 Legislature.

"It just seems you're picking a fight that doesn't need to be picked," said Senate President John Valentine, R-Orem.

Despite concerns Huntsman's tax reform proposal takes on several sacred cows of Utah's tax code, lawmakers say his plan has more momentum than previous flat-tax models. Task force staff will meet with the governor's team and start drafting language for the committee's Oct. 12 meeting.

"There's a lot to like in this proposal," said Provo Republican Sen. Curtis Bramble, the Senate chairman of the task force. "I didn't see anything in here that would be a deal-killer. But there's going to be some fine-tuning."

In other action:

* Members of Utah's Tax Reform Task Force tabled discussion of proposed legislation that would amend the State Constitution to separate education funding from the income tax.

* They also advanced a proposal which would ease public notice requirements for property tax increases.