Utahns back corporate tax

Gov. Jon Huntsman Jr.'s idea of repealing the state's corporate income tax is much disliked by Utahns, a new poll shows.

And Wednesday, a key legislative tax reform group shunned repeal of the tax, taking a different route in helping Utah businesses prosper.

A subcommittee of the Tax Reform Task Force recommended that the complicated formula for calculating corporate income taxes be changed, giving Utah-based businesses a tax break. The change could save businesses — and cost the state — more than $60 million a year.

The subcommittee did not recommend that the current 5 percent corporate income tax be phased out, as Huntsman advocated during the 2005 Legislature. The subcommittee's work "is about done," said co-chairman Sen. Howard Stephenson, R-Draper. But Huntsman's proposal could still be considered later.

Repealing the tax would greatly help only a few hundred businesses, critics say, while possibly harming public education spending. Tax Commission records show 55 large businesses, each with profits of more than $10 million a year, make up 53 percent of the corporate tax revenue total.

Huntsman says repealing the tax will stimulate the economy, and a growing economy can replace any revenue lost. But most Utahns still oppose the repeal, a new Deseret Morning News/KSL-TV poll by Dan Jones & Associates shows.

The survey, conducted last month on a variety of state tax issues, shows 69 percent of Utahns don't want the main corporate income tax repealed.

Only 19 percent favor repeal, Jones found; 13 percent didn't have an opinion.

Although Huntsman and large majorities in the House and Senate are Republican, Jones found that 62 percent of their fellow party members in the state don't want the corporate tax repealed.

Aside from corporate taxes, the subcommittee on Wednesday also voted to recommend a bill that would cut taxes for the state's two main electrical power suppliers — Utah Power and the Intermountain Power Project.

What's termed a "second gross receipts tax" was placed on the utilities the last day of the 1995 Legislature as a way to raise some extra cash for the state, IPP manager/lobbyist Reed Searle told the committee a month ago. That was bad tax policy then and is bad tax policy now, said Stephenson, whose bill, as adopted, would require the estimated $10 million tax cut be passed on to the utilities' ratepayers.