John Dougall, Utah state auditor and a former Utah legislator, detailed Utah’s experience with major tax reform for attendees at the Associated Taxpayers of Idaho conference this morning. He said the effort started back in 2001, and after extensive study, the tax reform bill passed the Legislature unanimously in 2007, with bipartisan support. It set a flat state income tax rate of 5 percent, but got rid of exemptions and deductions, going instead to a system of tax credits, which phased out as income increased and also as age increased, to accommodate retirees.
Among the lessons learned in Utah, he said: “Reducing sales tax on food is not ideal tax policy, but in Utah, it was very popular.” Also, “Simplification went out the window.” Utah’s income tax is now much more complex, due to the new system of credits and phase-outs. And, he said, “98 percent of Utahns saw a tax cut.” Following enactment of the reform plan, he said, “Any discussion of tax cuts in ’09, ’10, ’11 was basically a non-starter.”