Senate approves tax-revision bill that phases out corporate income tax; opponents cite risks to school fund

The Utah Senate on Feb. 23 passed First Substitute Senate Bill 195, a tax overhaul measure that includes double-weighting sales in the multistate allocation formula and a phased reduction of corporate income taxes.

Senator Bramble described the measure as a centerpiece of the governor’s economic-revitalization plan. He said the change would give the executive branch a tool to recruit businesses and increase the size of Utah’s economy, noting a two-year delayed implementation and a five-year phase-out for affected taxes.

Opponents raised fiscal and policy concerns. Senator Maine urged caution, arguing that removing franchise and corporate income taxes from task-force consideration could be premature and asked whether the state would sacrifice negotiating leverage when pursuing a fairer tax system. Senator Aaron warned that the revenue would come from the Uniform School Fund and questioned whether the tax change was proven to attract business headquarters or manufacturing, citing testimony that only two states have lower corporate tax rates than Utah.

Senators debated whether middle-income tax relief would be a better way to spur economic activity; backers said the bill was designed to expand the state’s competitive toolkit. After debate the Senate passed the bill (23 yes, 5 nay, 1 absent) and referred it to the House for further action.