Under current law, companies can elect to base half their corporate taxes on Utah sales, with the rest split between property and payroll taxes. Or they can figure their taxes on a formula that gives equal weight to sales, property and payroll.
The bill sponsored by Sen. Howard Stephenson would permit companies to choose any one of the three methods to calculate their taxes.
Stephenson said the bill would encourage out-of-state corporations to bring high-paying jobs to Utah. It might also induce companies considering whether to leave the state to keep jobs here.
"This is more of a family bill to me than it is about business. The annual wage in Utah is 82 percent of the U.S. average. Something needs to happen," Stephenson said.
The new tax measure would be fully operative in 2011. It would decrease revenue to the state Education Fund by $5 million in the next fiscal year. The impact would increase to $22 million in the following year. Fully phased in, the loss to the fund would be about $61 million.
Because education funding would suffer, the bill was opposed by the Utah Education Association. Courtney White, director of research and bargaining for UEA, said the bill was unnecessary because Utah already is seen as a good place to do business. Companies look at the quality of schools and other factors besides taxes as they make decisions about where to expand, he said.
Stephenson acknowledged the fiscal impact to schools and said he would be willing to consider limiting the tax break to crucial industries, such as transportation.
While Delta Air Lines wasn't mentioned during discussion of the bill, the airline is on the minds of many lawmakers.
Delta, which fended off a hostile merger offer from US Airways while in bankruptcy last year, has opened formal merger talks with Northwest Airlines and United Airlines. While a tie-up with Northwest might be advantageous to Delta's hub at Salt Lake City International Airport, a combination with United probably would spell the end of the hub.
Many other states allow corporations to compute their income tax bills on in-state sales, according to Utah Tax Commissioner Bruce Johnson.
pbeebe@sltrib.com
