Members of a legislative task force gave partial approval Wednesday to the governor's plan for a 5 percent state income tax. At the same time, they started editing - cutting the governor's cap on exemptions for dependent children and outlining their plans to add in a tax credit for home mortgage interest.

It's a matter of consistency and political reality, Tax Reform Task Force co-chairman Curt Bramble said. Huntsman's tax already is not truly flat because it allows up to five personal exemptions and a credit for charitable donations. Leaving out the time-honored mortgage interest tax deduction doesn't make sense, Bramble said, and would upset homeowners and realtors alike.

"If we want to have tax reform and have a realistic chance of passing a flatter tax, you have to address what would be a concern of the majority of stakeholders," Bramble said.

And he said the idea of capping Utah's traditionally large families at five exemptions is simply ill-advised.

The task force sent on Huntsman's original proposal to the Interim Revenue and Taxation Committee - which would have to approve any legislation to change the tax - as well as their own revised version. Additionally, they forward to the panel a plan from Rep. John Dougall, R-Highland, for a 4 percent flat tax with a sales tax credit, and a suggestion from Rep. Steve Urquhart, R-St. George, to simply lower the top state income tax rate from 7 percent, leaving all deductions in place.

Last week, Huntsman and a team of economists and accountants detailed their plan for tax reform - a 5 percent across-the-board rate with a tax credit for charitable donations and a cap on personal exemptions. The governor and his advisers say their plan would give most families a lower tax bill.

Lawmakers apparently plan to use the framework of the governor's plan, while welding on politically popular appendages of their own.

Accountant and Huntsman tax adviser Keith Prescott was not surprised lawmakers targeted the cap on exemptions. But he protested adding in a mortgage-interest tax break. He said giving Utah taxpayers full credit for their mortgage interest would either result in a $200 million shortfall under the governor's 5 percent tax or would bump the income tax rate up to 5.6 percent or 5.7 percent to make up that revenue, making Utah's flat tax less competitive with surrounding states.

Besides, Prescott says, the mortgage interest deduction ends up benefiting the wealthy because they own larger homes with higher interest payments. Renters and older homeowners who have paid off their mortgages do not benefit from the deduction at all.

"It accrues to the rich," Prescott said.

Some lawmakers dispute that premise. Urquhart said the governor's plan hurts some residents of his Southern Utah district - teachers and police officers with modest $35,000 salaries living in $230,000 homes. Adding in a credit for mortgage interest would alleviate some of their burden. He said sticking to a 5 percent number doesn't make sense in those circumstances.

"Yes, we can say we have a 5 percent rate," Urquhart said. "But really I question: 'Have we raised taxes on a portion of the population we don't want to?' It shifts the burden."

In other action

Along with the four versions of income-tax reform, task force members forwarded several other tax proposals on for public comment at hearings later this month:

* Salt Lake City Rep. Ralph Becker's proposal to raise the income threshold for a "circuit breaker" property tax credit for retired homeowners.

* A plan to exempt materials purchased by businesses from sales taxes. Draper Sen. Howard Stephenson's proposal encompasses the mining, manufacturing, film and telecommunications industries.

* Utah Issues' proposed "grocery tax credit" for families earning less than $30,000 a year.

* West Jordan Rep. Wayne Harper's proposal to do away with so-called "zoning for dollars" by eliminating a 1 percent local sales tax, but replacing it with state appropriations and increased tax authority for local government.