House Bill 78 is touted by Gov. Jon Huntsman Jr.'s office and some lawmakers as a way to attract companies to build in Utah.

But that attraction isn't free.

If the corporate income tax is eliminated, it could cost the state's school funds as much as $200 million by the time it is fully implemented in 2012.

"We're concerned about where the lost revenue would be made up," the Utah Education Association's Courtney White told the House Revenue and Taxation Committee, which passed the bill Wednesday over Democratic opposition.

The bill, now headed for the House floor, is part of a move to reform Utah's tax structure, which some argue is archaic. Huntsman, like former Gov. Olene Walker, wants to simplify the tax code.

HB78 sponsoring Rep. Wayne Harper, R-West Jordan, says the corporate income tax proposal is the start.

"This is a very weighty decision," he said. But "I believe the time is right for this."

Among other changes, HB78 would reduce the corporate income tax by 1 percent each year until the tax disappears in 2012. Utah would take a $3 million hit the first two years, and then the drop would hit $40 million.

Too much, says Sarah Wilhelm, program director for the nonpartisan Utah Issues group. "We'd have to create about 75,000 jobs to make up that revenue in income tax," she said.

Huntsman's deputy chief of staff Neil Ashdown says the ultimate goal is to bring in enough companies with the favorable tax structure to compensate for lost revenue.

Harper's plan also calls for softening how a corporation calculates its income taxes.

The bill would allow a company to choose how to calculate the tax between two options, including one referred to as "double weighting" that would benefit a Utah-based company that exports almost all of its products.

For some companies, that change is overdue.

Sinclair Oil Corp. Senior Vice President Clint Ensign says the company took a hit after putting money into its Grand America Hotel, Snowbasin ski resort and building a new pipeline.

"We did exactly what you would think we should do and that's invest in the state. But it hurt us from an income tax perspective," Ensign said.

The corporate tax is based on three equally weighted factors - property, employee wages and sales. Since Sinclair added value to its property and increased its work force, it paid more corporate tax.

Harper's bill would increase the importance of sales in the tax formula, decreasing the effect of more employees and more property.

Still, Democrats weren't buying the idea.

"It's premature to be acting on this," said Rep. Roz McGee, D-Salt Lake City. The bill passed 11-4.