Gov. Jon Huntsman Jr. announced Wednesday the omission that would have hiked the planned tax cut by 50 percent - to more than $100 million. As a result, the governor scrapped plans for a May special session at which he had hoped to pass the so-called flatter tax.
State number crunchers failed to include a tax credit for income tax paid in other states when running models on the various versions of the reform plan.
Until new numbers are generated that lawmakers are confident in, Huntsman says a decision on the package will be delayed until a later special session - or possibly until the next regular session in January.
Rep. John Dougall, R-Highland, who as House sponsor of the governor's proposal ordered many of the dozens of calculations run on tax scenarios, said he was frustrated to learn the data, prepared by Tax Commission Senior Economist Tom Williams, was fundamentally flawed from the beginning.
"I can't rely on any numbers he [Williams] generates. If we are going to move ahead on this proposal, we have to have someone who can do the numbers accurately," Dougall said. "I can't trust anything he generates."
Dougall's issue with Williams is not one of competence, but of philosophy. The Utah County Republican complains Williams has liberal political leanings and publicly has given opinions in opposition to the Huntsman plan.
This is the second time in as many weeks that Tax Commission economists have come under fire. Chief Economist Doug Macdonald retired March 31 after 31 years in state government, in large part because he and the two other tax economists had gotten letters from commissioners threatening disciplinary actions and warning them not to express "their own positions, opinions and views" when representing the commission.
Macdonald maintains the warnings came because the economists dared question aspects of Huntsman's plan in public and because of the "leak" of documents indicating thousands of retirees would take a hit under the tax plan.
Commission Chairwoman Pam Hendrickson replied to Dougall's complaints with a prepared statement: "We appreciate the legislator's concerns, but we don't anticipate making any administrative changes," she said. "We believe this was an unintended error and the Tax Commission takes responsibility for the mistake."
In an interview, Hendrickson explained the error was the result of commission staff failing to link existing credits in tax code to the complex reform plan (Dougall's bill is 120 pages). Part of the confusion resulted from the nature of a flat tax, which in its purest form would have no credits or deductions.
But Huntsman's "flatter" income tax - which would cut the top rate from 7 percent to a flat rate of about 5 percent - includes partial credits for home mortgage interest and charitable giving. As lawmakers and the governor's staff added in and tinkered with various credits, staff lost track of the credit for income earned in other states.
"It was a mistake that many of us should have caught," Hendrickson said. "No heads will roll."
Huntsman spokesman Mike Mower said the governor, who appoints commissioners, would not get involved in Tax Commission personnel issues.
Commission officials said they were unable to contact Williams in response to the Tribune's request for an interview.
Hendrickson said the mistake was discovered about two weeks ago when the staff was breaking out the various tax credit costs at the request of legislators.
"It was in the process of doing that we got an 'Oh-my-gosh!' look," she said. "One thing we've done this week is find out how we missed it. We're going to look at ways to cross-check each other. "
Though the governor's office was notified within a day of the discovery, the mistake was not made public until it was confirmed Wednesday, Huntsman's spokesman said.


