Huntsman touched on the proposals at the annual pre-legislative session gathering of the Utah Taxpayers Association. In his brief speech, he did not explain how he would make up the lost revenue, which could be as high as $300 million. His deputy chief of staff, Neil Ashdown, said the governor's office would work with lawmakers to flesh out the proposals.
Huntsman flashed the audience a laminated "pocket card of priorities" with economic development listed No. 1. His first subsection is tax reform.
"I want to create a more fertile business environment," he said.
But Huntsman also cautioned those in attendance, including more than a dozen lawmakers, that he would not push for a major overhaul in the upcoming legislative session, which begins Monday.
Changes to sales tax and individual income tax codes will wait at least until next year because that "is a little more work than we can provide in this legislative session," Huntsman said.
He called Utah's corporate income tax "antiquated" and a "competitive disadvantage" when recruiting new companies. He also said revenues from the tax are dropping 8 percent a year, as companies reorganize to avoid it.
He wants to change the corporate income tax formula, adding more weight to a company's sales. This would decrease the effect of the company's real estate holdings and employee wages, which currently are treated equally. This plan would result in a decrease in taxes for corporations that sell products in other states. A tax task force presented a report to an interim legislative committee in November that estimated the formula change would decrease revenues by $1 million to $2 million a year.
At some unspecified time, Huntsman said, he wants the corporate tax scrapped all together.
Lawrence Barusch, a member of the Utah Tax Review Commission, which advises the governor on tax policy, said, "Eliminating the corporate income tax might very well be a significant incentive to locate some pretty good jobs here."
But Barusch is not a fan of changing the formula. "If a business has particularly a lot of people in Utah and a lot of property in Utah, then it uses a lot of services in Utah and they may not be paying their fair share," he said.
Huntsman also called for the repeal of the capital gains tax, which is levied on the profits made through selling an investment. He said middle-income families should not be penalized for creating wealth, describing a scenario in which an entrepreneur invents a product and later sells it to a larger corporation.
That may happen, Barusch said, but dropping capital gains generally benefits those with high incomes, not those in the middle class.
Sen. Howard Stephenson, R-Draper, defended Huntsman's plan to repeal capital gains, saying it would stop the "exodus" of Utahns moving to "Jackson Hole, Wyoming, or Clark County, Nevada."
Stephenson, who also is president of the business-backed taxpayers' association, called capital gains "punitive."
The governor's two identified proposals have a reasonable chance of success this legislative session, predicted Stephenson.
"He described himself as the economic development governor, and right out of the chute he has shown that his intent is to increase jobs and salaries for Utah," Stephenson said.
Money collected through corporate income tax and capital gains tax is earmarked for public and higher education. Corporate income tax brings in $150 million to $200 million a year. Capital gains produces $100 million in revenue each year. The total budget is about $8 billion.