The tables in this chapter report tax credits for 1994 and 1995. The first table for each year indicates the raw data reported on the return, and the second table for each year corrects some amounts that are reported but not used because the tax liability was not large enough. Several of the credits have been combined in an "other credits" (see table footnotes) category to prevent disclosure problems since they are used by so few taxpayers. The category may have different members from year to year. (Some of them are very new, however.)
Readers may note that the return numbers do not add up. This is because a return may include several credits, in fact most do because of the prepayment credit.
Prepayments of corporate taxes and the withholding of taxes on mineral production royalties are claimed on the Utah form as refundable credits. To the purist, it may even seem strange to call these credits against the tax since they are actually payments of the tax. In 1994 prepayments totaled greater than $128 million and in 1995 nearly $159 million. Actual taxes due for those periods were $122 million and $141 million. It appears the prepayment requirements are working well to collect taxes, and that firms, in aggregate, are cautious in meeting prepayment requirements.
Refundable credits - those which will be returned to the taxpayer if they exceed the tax liability - include the "Off-Highway Agricultural Gas Tax Credit" in addition to the above prepayments. Their inclusion on the corporate form is a convenient way to refund gasoline taxes paid which the Legislature has exempted. In 1994 they were $45 thousand and in 1995 $59 thousand.
Incentive-based credits are small
Nonrefundable credits are generally
designed to induce corporations to engage in a socially or economically desired behavior, such as investing in underdeveloped areas or exporting coal, or at least to reward them for doing so. Since they are nonrefundable, the full value of the credit may often not be used. The nonrefundable total on the accompanying table reports on those credits that can actually be used to reduce taxes, and the balance is reported on the line "excess credit." In rounded terms, about 180 taxpayers benefited in 1994 and 1995. In 1994 the amount used was only $2.3 million; in 1995 the amount used was only $2.1 million. In 1994 only about a half a million dollars was not usable, but in 1995 over $2.5 million was unused. Depending on the nature of the credit, they may be used in future years. Also there may be more unused available since some forms only report credits that are usable.
Some of the salient observations about credits follow:
In sum, it does not appear that the state is having large or widespread impacts through the incentive-based corporate tax credits.