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Under pressure from Senate Republicans in a closed-door caucus Tuesday, Gov. Jon Huntsman Jr. is adjusting his "flatter" income tax reform proposal to result in a significantly bigger tax cut.

Huntsman's plan, which is actually a compromise with Republican leaders that includes deductions for mortgages and charitable giving, would set the tax rate at 4.9 percent.

Reducing the rate from the current 7 percent top rate would make Utah competitive with other Western states in attracting businesses, Huntsman's economic advisers say.

It would also mean $60 million flowing back to taxpayers rather than going to schools.

Senate President John Valentine said the Republican caucus is concerned that Huntsman's plan has too many "losers."

"It was a very energetic and vibrant debate and it will continue," Valentine said of the lunch meeting with Huntsman, which marks the governor's first face-to-face encounter with the caucus.

Huntsman and his advisers argue for tax reform that would stabilize and simplify income tax.

But, says Valentine, "There are losers in tax reform."

Senators made it clear they want a larger tax cut to soften the impact of the Huntsman reform on many of their constituents. Without that, Valentine, said lawmakers might consider leaving the existing structure in place, but lowering the top rate to produce a tax break.

"We asked him to come back with $60 million and $100 million [tax cuts] to give us benchmarks," Valentine said.

Huntsman agreed to rework the plan, possibly lowering the rate to 4.75 percent, which would divert about $100 million in growth from schools and back to taxpayers, said his economic adviser Keith Prescott.

Sen. Curt Bramble, who is sponsoring the governor's tax plan in the Senate, said the meeting means, "It's back to the drawing board."

"We knew when we came up with the plan, it would be subject to debate," he said.

Prescott, however, said that tax reform advocates are hesitant to tweak the plan too much. "If we start to hang a lot of ornaments on the Christmas tree again, we will lose stability."

A glance at the tax charts for the Huntsman plan shows the most significant group of "losers" would be among taxpayers in upper income ranges. Some returns in the $125,000 to $275,000 range would see tax increases of around $500. In the $75,000 to $90,000 range, average increases are in the range of $200. (Other taxpayers in these upper income levels - mostly those with no mortgage interest or charitable giving deductions - would see tax cuts.)

The House's version of the Huntsman income tax plan, complete with the 4.9 percent rate, was introduced in committee just hours after the Senate caucus met with the governor. The plan sponsored by Rep. John Dougall, R-Highland, also includes the complete elimination of the sales tax on groceries.

The House Revenue and Taxation Committee advanced the bill on a close 8-7 vote.

Economic advisers to Huntsman and former Gov. Olene Walker have pushed for a reform of Utah's aging and patched income tax system to provide stable and growing education funding to meet a flood of students who will enter the schools over the next decade.