A thorough tax restructure or nothing? A legislative task force created to scrutinize Utah's corporate tax structure met for the first time Friday and had no recommendations — yet.

The Income Tax and Corporate Franchise and Income Tax Task Force findings could result in a variety of options, from eliminating some tax exemptions and credits or cutting corporate taxes, to doing nothing at all and leaving the tax system as is.

"We've been doing quick fixes for years," said Rep. Wayne Harper, R-West Jordan, who co-sponsored the bill that created the task force. "It's time to go through and say, 'We're going to do a major program change,' or, 'We're fine with what we have now.' "

The task force will meet as many as eight more times before they reveal their recommendations to a legislative committee in November. Also mulling over Utah's tax system is a panel appointed by Gov. Olene Walker and the state's Tax Review Commission.

Thirty years have passed since any major change has been done to the individual and corporate income tax systems, Harper said. Recent flurries in tax reform activity and multiple questions about Utah's system spurred Harper and Sen. Lyle Hillyard, R-Logan, to sponsor HB168, which created the task force.

"I don't want to meet just to intellectualize," Hillyard said. "When we get to the end of this thing, I want to have something we can do about it." Sen. Bill Hickman, R-St. George, said although it faces a tough task, the committee will be able to come up with feasible solutions to Utah's tax problems.

"There are going to be some things we can accomplish here, but we're not going to solve all the problems," Hickman said. "I would like to see some solutions that will be an economic benefit to this state over a long time."

One issue the committee will tackle is tax evaders. Ten to 17 percent of Utahns fail to pay their taxes, said Rodney Marelli, executive director of the Utah State Tax Commission.

Marelli also questioned the use of "exemptions." He said if a cause is worthy enough for funding, "Why don't we just have it funded outright rather than have a portion come out of the return?" He said if exemptions were curtailed, tax rates would go down.

Utah might be losing businesses to other states because of its tax structure, Harper said. But Joe Zeidner, an attorney for 1-800-Contacts who is serving on the task force, said businesses flee Utah because of its overcrowded, under-funded school system.

"The taxes don't seem to be the big choking point," Zeidner said. "It seems to be education."

Corporate income tax revenue accounts for 8.7 percent of the total Uniform School Fund, which funds the public education source.

Getting (corporations) to pay more taxes for education is a tough sell, said Rep. Stephen D. Clark, R-Provo. "If we could get the corporations to be willing to either up their taxes or be more generous in revenue to the state if (the money) went to education, that would be a great opportunity for everyone."

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Rep. Gregory Hughes, R-Draper, questioned whether a corporate income tax is needed at all, with new revenue coming in from the streamlined sales tax.

While the task force will only scrutinize income taxes, the governor's panel will comb through every tax on Utah's books. Formal recommendations from that group are expected to be ready by August. Walker will then take the proposals on a statewide campaign to muster support for major reforms.

The Individual Income Tax and Corporate Franchise and Income Tax Task Force will meet again June 14.


E-mail: ldethman@desnews.com

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