Guv's tax plan gutted

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.

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."

Huntsman ran his gubernatorial campaign last year on revitalizing Utah's economy, growing the tax base to be able to pay for 140,000 new public-school children and burgeoning college enrollments.