From Deseret News archives:

Business tax cuts dried up in legislature

Published: Wednesday, March 8, 2006 10:28 a.m. MST
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In the House GOP caucus, when that bill, HB52, showed up on the possible business tax-cut list, one representative asked what it was doing there — because it didn't help businesses.

"We're just putting it there," said Harper, the sponsor of HB52. Fellow Republican House members laughed, and the discussion quickly moved away to another topic.

During extensive public meetings last year, the task force members often spoke about the best way to give "economic development" tax breaks.

The general feeling of getting the most "bang for the buck" was reflected in Harper's HB53 and Stephenson's SB33.

As originally drafted, HB53 would have allowed Utah-based businesses to figure their corporate income tax three different ways, saving local firms $31 million.

Stephenson's SB33 extended the current manufacturer's sales-tax exemptions for various business inputs to mining, information technology and other sectors, saving those firms together $44 million a year. But the price tags for both bills was too high, so the sponsors cut them back to $16 million and $9.1 million, respectively.

Ultimately, those accommodations weren't enough.

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When Huntsman and GOP members in the House and Senate reached their final tax cut/budget compromise just three days before adjournment, leaders agreed to $70 million cuts in the food sales tax, $70 million cuts to the personal income tax and only $20 million in business tax cuts.

Huntsman told a KUED-TV news conference: "I'm willing to look at some investment that would be in the name of sound economic development . . . encouraging the purchasing of capital equipment and componentry that goes into expanding the economic base."

But HB53 and SB33 still didn't make the list.

Harper, a former economic development boss for the city of West Jordan, said he's learned through 12 years in the competitive attract-new-business business "that corporate officers do look at the personal income-tax rates."

Harper said lowering the state's current top rate from 7 percent to 4.9 percent (as Huntsman's personal income tax reform package would do) "will give us enough of a push to compete with Wyoming" and other Western states that have no state income tax or that have state income tax rates less than 7 percent.

Huntsman, who calls special sessions and sets the agendas, will call lawmakers back, likely in April or May, and the 4.9 percent "flatter" tax will be on the agenda. Harper doesn't anticipate that Huntsman will put any business tax-cut issues on the call.

"We don't have the money for them," he said.


E-mail: bbjr@desnews.com

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