Senate looks at slashing corporate tax

Gov. Jon Huntsman Jr. gets another shot at winning legislative support for his effort to eliminate corporate income taxes.

Although a House bill that would have phased out the tax was gutted last week, the Senate is prepared to introduce its own version of the governor's proposal.

"It's the same thrust," said Sen. Curt Bramble, R-Provo, the sponsor of the legislation. Bramble said he has the support of 21 of the Senate's 29 members.

Bramble said Thursday he intends to substitute his own bill exempting capital gains from taxes, SB195, which was pulled back from a committee earlier this week due to its high price tag — $125 million in the upcoming fiscal year alone.

The new language, expected to surface Monday, is likely to be similar to HB78, a bill that originally would have phased out corporate incomes taxes starting in two years, with a complete repeal by 2012.

Since the Utah Constitution says all personal and business income taxes go to support public and higher education, the original HB78 would have cost schools more than $200 million a year by 2012 — a huge number that some House Republicans and Democrats wouldn't swallow.

"The governor's tax plan wasn't even mostly dead," Bramble said. He said he will substitute his bill Monday in the Senate Revenue and Taxation Committee, which Bramble chairs.

Huntsman's spokeswoman, Tammy Kikuchi, said "eliminating the corporate income tax is important to the governor, and we are very pleased. . . . It is an important step toward tax reform."

The sponsor of HB78, Rep. Wayne Harper, R-West Jordan, said he's "not going to try to change" his bill. It was stripped of the phase-out of the corporate income tax.

"I have no plans to try to amend it back" to its original form, Harper said. "We'll see what happens."

He said he intends to uncircle HB78 on the House floor Friday and just run the bill without the corporate income tax phaseout.

As amended, HB78 still gives a $7 million to $8 million a year tax break to corporations because it allows businesses to figure their income taxes two different ways. Of course, business owners will choose the one that saves them more in taxes.

The phaseout part of HB78 was taken out Feb. 7 in a 39-29 vote. Twenty Republican House members voted to "gut" the tax break cut sought by Huntsman, including House Majority Leader Jeff Alexander, R-Provo.

All Democrats voted to keep the business tax as well.