From Deseret News archives:

Guv's tax plan gutted

House members refuse to kill business income levy

Published: Monday, Feb. 7, 2005 10:40 p.m. MST
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Utah House members Monday gutted a corporate income tax repeal bill — a bill Gov. Jon Huntsman Jr. says he needs to sell the state to corporate suitors.

But in refusing to repeal the business income tax — which would cost public schools at least $200 million by 2012 — representatives join a majority of Utahns who don't want the tax phased out, a new Deseret Morning News/KSL-TV poll shows.

The Dan Jones & Associates survey shows that 62 percent of Utahns don't want the tax phased out; 25 percent support the repeal, while 13 percent don't know.

Debate on HB78 was halted Monday after Rep. James Dunnigan, R-Taylorsville, substituted Rep. Wayne Harper's original measure. Dunnigan's replacement still gives Utah businesses two ways to figure their corporate income tax, thus saving many a bit of extra cash. But Dunnigan stripped the bill of Huntsman's main goal: a phaseout of the corporate income taxes starting in two years, with complete repeal by 2012.

Neil Ashdown, Huntsman's deputy chief of staff, said after the vote that the governor, a Republican like most legislators, will try to get the House to reverse itself or get the Senate to put the corporate tax repeal back in HB78.

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Dunnigan quoted from an anti-HB78 handout that says 75 percent of Utah corporate tax is paid by out-of-state firms who do business here. Why give out-of-staters a tax break when Utah schools need the money so badly, he asked.

Dunnigan was joined in stripping out the tax repeal by a handful of fellow GOP legislators and House Democrats, his amendment passing 39-29 with seven absent. The close vote means GOP leaders would only have to turn around a few Republicans to push Harper's bill back into a major tax-cut measure.

But it may be more difficult to convince Utahns in general that not making businesses pay money into the public education system is a smart move.

Jones found universal dislike of Huntsman's repeal. Even groups that one might guess would side with the governor don't.

Fifty-seven percent of Republicans oppose repeal; 65 percent of college graduates (who may own some Utah businesses) oppose repeal; and 63 percent of those making more than $55,000 a year (who may also own some businesses) oppose repealing the tax.

Told of the poll results, Huntsman said: "People fail to realize that consumers end up carrying the burden of the corporate income tax. The tax cannot be seen as stand alone, but rather, part of a broader attempt to refine the tax code, which has not been revised since the 1950s."

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