Monday, December 25, 2006

Tax Reform/Relief -- Revisited

At the Senate Site they revisited the ever perplexing question of what should the Legislature do in order to provide meaningful tax relief to all Utahn's. I would like repost my comments from the Senate Site post:

""If we a) want a tax cut package that directly benefits lower as well as higher income brackets, yet b) find it unwise to completely delete the tax on food... what other options should we be considering?"

While I am appreciative of the tax cuts that the legislature has passed, I believe there has been many viable options that have been balked at.

-- The Governor has a flat tax. Tax relief for the upper class is signed and delivered. (If anyone needs my analysis of the flat tax as a break for the rich, I invite a visit to my blog archives for an exhaustive review)

-- The rate drop to 6.98% from 7% is nice, but could have been more friendly with brackets that are actually in a real income range (11,000 is where the top bracket phases in). True tax relief for the lower and middle class could benefit from some smaller implementations of a few Federal tax breaks (family friendly Child Tax credits, Saver's credits for lower-middle class families who save for retirement, and a smaller version of an Earned Income Credit for low income wage earners)

Once more I appreciate the steps taken to cut taxes in this state, however a broader effort could have been made to offer real tax relief to the middle and lower income taxpayers. The wealthy definitely pay there fair share and deserve some relief, but not at the cost of those who are less able to pay taxes.

Lastly, our State Tax Commission does a masterful job at collecting tax, but I believe they should have some reigns put on their tax collecting power. The Federal government requires the IRS to collect tax debts within 10 years, and requires the IRS to accept all reasonable offers to settle outstanding tax debts. The State of Utah has put no such reigns on the power of Utah State Tax Commission. As a tax practitioner I have seen many gross abuses of this power against taxpayers (in one case even breaking federal law that disallows liens to be placed against active duty soldiers). There needs to be operational reigns placed on the Utah State Tax Commission. "

Of all of the above suggestions listed, I would like to strongly recommend stronger operational reigns being placed on the Utah State Tax commission. The Tax Commission operates without a collections statute of limitations, and therefore has little incentive to truly consider offers to settle outstanding tax debts. One solid break the legislature could give to Utah taxpayers is a taxing authority that operates a little more fairly.

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