Poll Finds Strong Opposition to Ending Corporate Income Tax

Poll Finds Strong Opposition to Ending Corporate Income Tax

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SALT LAKE CITY (AP) -- A new poll has found strong opposition to Gov. Jon Huntsman Jr.'s idea of repealing the state's corporate income tax.

Meanwhile, a subcommittee of the Tax Reform Task Force on Wednesday did not recommend phasing out the tax but did suggest changing it to give Utah-based businesses a tax break at a cost to the state of more than $60 million a year.

The subcommittee did not recommend that the current 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 to abolish the 5 percent corporate income tax still be considered later.

Just 19 percent of Utahns surveyed by Dan Jones & Associates for the Deseret Morning News and KSL-TV favored phasing out the tax, while 69 percent opposed the Huntsman proposal. Thirteen percent did not have an opinion, the News reported Thursday in a copyright article. The poll taken last month involved 413 residents and had a margin of error of plus or minus five percent.

Repealing the tax would greatly help only a few hundred businesses, critics contend. 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 contends repealing the tax would stimulate the economy, and the economic growth would make up for the lost tax revenue.

In other action Wednesday, the subcommittee recommended a bill that would cut taxes for Utah Power & Light and the Intermountain Power Project. The taxes were placed on the utilities by the 1995 Legislature.

The bill is sponsored by Stephenson, who is president of the business-backed Utah Taxpayers Association.

It would require that the $10 million tax cut be passed on to the utilities' ratepayers.

The subcommittee also voted to adopt an "electable single sales factor" formula for the current corporate income tax.

That would reduce the state revenue by $63 million, while repealing the tax would cost the state $150 million to $200 million.

The Utah Education Association and Utah Issues urged caution by legislators.

Courtney White of the teachers' union asked how the $63 million would be made up.

Sarah Wilhelm, fiscal analyst director for Utah Issues, a low-income advocacy group, said studies show a state's corporate income tax rate "ranks pretty low" in corporate executives' decisions on where to locate.

Mike Jerman, vice president of the Utah Taxpayers Association, said most Utah business people want the Legislature to exempt all "business inputs" from sales tax. But after that alternative, they want the single sales factor option as part of tax/economic development reform, he said.

The $63 million revenue reduction with the single sales option might be too great to absorb in one year, Jerman said, adding, "You could phase it in."

Stephenson, Jerman's boss, then made the motion to have a bill drafted to give the single sales option.

Huntsman deputy chief of staff Neil Ashdown, who is a member of the Tax Reform Task Force, said Huntsman has not given up on repeal of the whole tax but is looking at all options to enhance economic development. Ashdown voted in favor of the single sales option.

(Copyright 2005 by The Associated Press. All Rights Reserved.)

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