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Senate advances substitute flat-tax plan after heated fiscal debate
Summary
The Utah Senate substituted a modified flat-tax measure (SB 242) that would set a 4.95% rate and create income and homeownership credits. Sponsors said it is tax reform; opponents warned of an $82 million static fiscal hit and potential impacts on schools and middle-income taxpayers. The bill was sent to the House for further action.
The Utah Senate on Friday substituted and advanced a modified flat-tax proposal intended as the next step in state tax reform.
Senator Scott Bramble, sponsor of Senate Bill 242, described the substitute as "a modified flat tax plan" worked out with the governor's office and the tax reform task force. Bramble said the first-version substitute establishes a 4.95% income-tax rate and includes an income credit (phaseouts by income), a per-person credit, a homeowner credit (the higher of $250 or 50% of mortgage interest), and a charitable contribution credit. "This bill has an $82,000,000 fiscal note," Bramble said during floor debate, calling the substitute a vehicle to take a workable package to the House.
Opponents raised immediate fiscal and distribution concerns. Senator Arendt cited the fiscal note’s projected losses to the Uniform School Fund and said she could not support a bill that jeopardized school funding at the stated level. Senator Thomas criticized what he called the potential for middle-class taxpayers to lose under earlier versions and said changes must avoid creating “losers.” Several senators urged a lower fiscal exposure before finalizing the plan.
Supporters, including Senator Stevenson and Senator Dimitrich, argued the proposal is reform, not just a rate change, and said that lowering the top rate could improve the state's long-term competitiveness and stimulate higher-paying job creation. "The static fiscal note doesn’t account for positive economic effects over time," Stevenson said, echoing task-force analysis.
The Senate voted to substitute and circle the bill for floor consideration; under suspension of the rules the body proceeded with second- and third-reading steps and sent the substitute to the House. Bramble said negotiators expect continued work this weekend to lower the fiscal note closer to a $70 million target as the plan moves to the other chamber.
What happens next: The House will receive the substituted bill and fiscal analyses; Bramble said the version and fiscal exposure may change as negotiations continue. The Senate’s action sends the framework to the House for further amendment and debate.
(Reporting notes: Quotes and roll-call tallies are from floor debate reported on the record.)
