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Cover Story

The Tax Man Page 2

Playing Robin Hood for Utah's schools is only the latest puzzle passionate nerd Matt Frandsen is trying to solve.

By Eric S. Peterson
Posted // November 11,2009 - Performance Art
While now a die-hard disciple of Ralph Naderstyle populism, Frandsen grew up in a conservative household and lived by fiscally conservative standards.

Aside from incurring a small student loan, Frandsen followed his father’s advice and never borrowed money, which enabled him at the age of 30 to quit his job as a chemical engineer and travel the world. During his journeys, he made an excursion into Cuba, hiked the Swiss Alps and even watched the fall of the Berlin Wall from Munich.

He returned from that quest and worked another five years in the engineering field, all while saving money by living in a small cabin in Huntsville and paying no mortgage. At 35, he retired with more than $100,000 in savings and, within two years, set off to hike the entire length of the Pacific Crest Trail, despite having only camped a couple of times since his days as a Boy Scout. In fact, he says, “I still had my Boy Scout aluminum-frame backpack, which is what they had in 1968.”

Frandsen’s own best analysis of his strange drives is that he is a “performance artist” who plays out roles—whether he is an outdoors enthusiast, an engineer or a political crusader. He has even spent a year constructing a guest cottage on his property with his own hands. “It took me $50,000 to build, it’s completely abstract, beautiful clay on the inside walls … obtuse angles and all this weirdstuff, and it worked! I built the thing!”

For as many adventures as Frandsen has embarked on, he’s had his share of misadventures, though he doesn’t regret them—he’s owned them. For example, Frandsen’s e-mail moniker is “Maserati Matt,” a nickname friends gave him after he purchased in 1993, on a whim, a 1969 Ghibli Maserati sports car. For a year following the purchase, he spent hours after work restoring it. He eventually sold it on eBay, in 2006, “for the amount I had put into it.”

While he is frugal by nature, he is not afraid to spend money on his passions. To that end, he says that he has spent about $25,000 of his own money on the taxreform petition. He earns about $35,000 annually through investment income and rental properties he inherited.

Another of Frandsen’s notable misadventures was a short-lived marriage. Frandsen married at 42 and, while he says he instantly realized it was a mistake, divorced six years later. As is par for Frandsen’s life, though, he says he now has a greater bond with his ex-wife as well as his young daughter he remains devoted to.

“It’s very nice to throw out these grenades,” Niederhauser says of Frandsen’s swipes at the single tax rate.

But Frandsen’s current foray into public life baffles even him. “Politics is a dirty business,” he says. “I don’t know how I ever got into this. It’s so weird.”

Half Vast
Utah Tax Review Commission Chair Keith Prescott, a downtown tax accountant with extensive state tax-policy experience, is, like Frandsen, a fast talker with a sharp mind. Unlike Frandsen, he’s seen how ugly it can be to reform the tax code, having been a core member of a group that led former Gov. Jon Huntsman Jr.’s tax reform effort.

Slipped under the glass cover on Prescott’s desk is a saying that seems telling in light of Frandsen’s goal to re-reform the tax code: “Never undertake a vast project with only a half-vast idea.”

Even though Frandsen and Prescott are on opposite sides of the issues, Prescott doesn’t dislike Frandsen. “He’s a nice guy,” Prescott says. “I just found him very set on what he wanted to do.”

What troubles Prescott, however, is that through the almost four-year process of the last reform, he never heard complaints from Frandsen or his supporters.

Prescott says he couldn’t offer a specific analysis of Frandsen’s 2010 projections from the Tax Commission, but, in general terms, he says, making a code that gathers more revenue by raising rates is hardly unique.

“There’s no magic here,” Prescott says.

“The trick is, how do you do enough analysis to know how it’s going to affect each segment of the population?” Having a stable, nonvolatile tax code is key, Prescott says.

Volatility, in simple terms, refers to the factor by which tax rates rise with increasing revenues during a good economy and likewise sink in a bad economy. States where tax rates ride a rollercoaster from one year to the next aren’t attractive environments for business, Prescott says.

“[Taxes] take from the production of the people, out of the engine that drives our economy.”

Wayne.jpgNiederhauser echoed these concerns, and says that reducing volatility was a key part of reform goals.

“It’s very nice to throw out these grenades,” Niederhauser says of Frandsen’s swipes at the single-tax rate. “But the thing they can’t argue with is that we need to have a rate that is competitive across the nation.”

So the question is: How big of a draw are personal income tax rates in attracting businesses to set up shop in Utah?

Bryant Howe, assistant director of the Office of Legislative Research and Counsel, sees income taxes as part of the big picture, but not a big part. “I don’t think it’s a major factor,” Howe says. [For more on Utah’s business development incentives, visit].

Frandsen, however, says that when an upswing is bringing in more revenue to the state, the state should save more of that cash in its “rainy day fund,” as opposed to lowering tax rates.

“The more volatile the system, the bigger the rainy day fund needs to be,” Prescott says. “But you can’t build it to be big enough to handle the whole thing.”

While Prescott disagrees with Frandsen’s petition, he agrees more should be put into the Rainy Day Fund. But, he says, there are other reasons why lowering rates is better than banking profits during flush economic years.

“Utah state government has grown the most in those good years, and it never shrinks,” Prescott says. “There’s a practical side to this: If you don’t think government should be the end all, be all, then you want to control the size of government. And in this state, that’s a very strong feeling.”

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