TAX NEWS - June 2010

Utah Tax: Utah gov hopeful proposes new business tax credits

SALT LAKE CITY -- Democratic gubernatorial nominee Peter Corroon released his blueprint for improving Utah's economy Wednesday, hoping to cast himself as the candidate with solutions to reverse the state's growing unemployment.

"The first and foremost thing we need to do in Utah is create jobs immediately. With the highest unemployment rate we have had in 26 years, the time to act is now," Corroon told reporters as he released his first significant policy statement.

In May, Utah's jobless rate was 7.3 percent. Republican Gov. Gary Herbert has said Utah's unemployment figures need to be taken in context - that Utah's rate is lower than the national average of 9.9 percent.

Herbert contends that he's done everything he can to stabilize Utah's economy, including resisting the temptation to raise income taxes. He says Utah's relatively lower unemployment rate is proof that Republican leadership is working.

Corroon disputes that, saying Herbert, who took office in August, hasn't released a jobs creation plan.

Corroon's plan calls for several new temporary tax credits, including one for businesses that create jobs that pay an above-average wage.

The credit would refund the increase in federal payroll tax businesses paid over the previous year for Utahans in qualified jobs. The average wage in Utah in 2009 was nearly $38,000 and qualified jobs would be those paying $50,000 or more a year, according to Corroon's plan. Corroon says businesses paying employees $50,000 would pay about $3,800 less in taxes per employee at that salary.

Corroon's plan also would require employers who receive state funds to hire Utah residents and require major firms that win state contracts to subcontract a portion of the work to Utah businesses.

His plan also calls for increasing the state's tourism promotion budget, providing tax incentives to businesses that relocate in high unemployment areas and invest in telecommunications infrastructure, and eliminating state taxes on new patent and software royalties.

"Instead of appreciating and capitalizing on Utah's natural advantages in the small, the innovative and the here, our state leaders have spent too much time focused on the big, the outdated and elsewhere," Corroon said.

He said Herbert's administration has spent too much effort trying to lure out-of-state businesses to Utah that compete with businesses that are already here. He likened that to corporate welfare.

"The other thing I think we need to do is look at all the incentives that have been given over the years to industries and companies that aren't necessary anymore," he said. "We should only give incentives to companies that are creating good jobs and high paying jobs."

Corroon will face Herbert in a special election this fall to fill out the remainder of former Republican Gov. Jon Huntsman's term that expires in 2012.

Herbert spokeswoman Angie Welling said the governor has been dedicated to economic development since he took office last August, when Huntsman resigned to become U.S. ambassador to China. In the fiscal year that ends July 1, corporate incentive offers have created more than 3,000 jobs, nearly $3 billion in new state wages and $260 million in new state revenue, she said.

"Economic development is not about spending hundreds of millions of dollars the state doesn't have and that will need to be taken from other critical areas of the state budget, such as education, or covering the spending through tax increases, which would have a devastating impact on the state's economic recovery," Welling said in a written statement.