HB 374: Attracting Exporting Companies to Utah
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Too often legislators fail to look for ways to improve Utah’s economy by creating a more business friendly environment. As new businesses are created, existing businesses locate facilities in Utah, and new jobs are created, the amount of tax revenue for Utah increases without any need to raise tax rates.
Using an elective single sales factor for corporate income taxes is one promising idea for creating a more business friendly climate in Utah. Since complete elimination of the state corporate income tax is a non-starter, this type of tax policy is a great step in the right direction.
Companies that choose to use the single sales factor would pay state corporate income taxes based on the amount of sales they make in Utah. This attracts new companies to locate in Utah if they rely mostly on exporting goods to other states or around the world. These exporting companies are typically high wage companies like manufacturers, IT, mining, and other basic industry.
Representative Dan McCay is sponsoring House Bill 374 this year to implement a single sales factor that companies could choose instead of using the evenly weighted three-factor formula to calculate state corporate income tax. This change in tax policy will help Utah remain competitive with other states that are also reconsidering their formulas for state corporate income taxes.