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Utahns' tax burden edges up
By Bob Bernick Jr.
Deseret News political editor
Feeling a little less green in your wallet?
Utahns' tax burden actually went up from 1999 to 2000 based on personal income spent on taxes, the Utah Taxpayers Association says in its annual study of state and local taxes in the United States.
Utahns went from carrying the 10th heaviest tax burden in the nation to being the ninth most heavily taxed, the study shows. Not good news.
However, when fees are added in with the tax mix, Utahns' ranking switches. It was ninth highest in taxes and fees in 1999. In 2000, it was the 10th highest.
The nonprofit tax watchdog group's annual ranking is a case of good-news, bad-news, says Mike Jerman, vice president of the Taxpayers Association, which is mostly funded by businesses. Fiscal year 2000 is the latest year in which economic numbers from the 50 states are available, he said.
"It has gotten worse here" as far as tax burden goes, says Jerman. "We're faced with a difficult situation. We have high taxes. Our public school class sizes are large. It's a function of our age demographics — large families, high birth rates" resulting in fewer people working to support basic government needs, he said.
In combination with Utah's family-oriented culture are other drawbacks — low wages and huge chunks of federally owned land that don't generate local property tax revenue, said Jerman.
Utahns historically rank high in tax burden, measured by the Taxpayers Association and other groups against personal income and state gross product.
Besides relatively high tax rates found here, Utah also places a tax on almost everything, including a sales tax on unprepared food. A number of states don't have income tax or sales tax or don't place their sales tax on items that are taxed in Utah.
Some of the good and bad news in the tax study:
• Utahns' total tax and fee burden rose in 2000 from 15.2 percent to 15.3 percent. That burden is 12.5 percent higher than the national average. But even with that increase, Utah dropped from ninth highest in the nation to 10th highest because some other states' tax and fee burdens increased more.
• When measuring only the tax burden — without fees — the percent Utahns paid in their personal income went from 11.4 percent, on average, to 11.6 percent. Most of that increase, says the Taxpayers Association, came in growing income taxes paid.
• Alaska, New York, New Mexico and Wyoming carry the heaviest tax burdens, according to the assessment.
• Utah has the seventh highest motor fuel taxes, a whopping 71 percent higher than the national average.
• Individual income taxes are the 13th highest, 24 percent above the average of states that impose an income tax. In 1993, the state income tax was taking 2.86 percent of total personal income. But by 2000 that had grown to 3.25 percent. Much of that is due to so-called "bracket creep," where people are pushed into a higher tax bracket because their wages have gone up. A bill passed by a recent Legislature adjusts income tax brackets by 15 percent, noted Jerman, which should help slow the "bracket creep" problem.
• In the 1990s, the Legislature and some local governments actually cut property taxes. Today, Utah has the 35th highest property-tax burden. Property taxes are actually 16.9 percent below the national average. But Jerman warns local governments and the Legislature shouldn't consider raising property taxes. "It is one of the most regressive taxes — not measured on your ability to pay" but on the value of your property, Jerman says.
"The sales tax is regressive, too. But to some extent people can chose to not pay that tax - just don't buy something." But the only way to avoid property taxes is to sell your house and buy a property lesser in value, a fairly extreme alternative.
If Utah raised its property-tax rates to meet the national norm, Utah would move from the 10th heaviest taxed state in the nation to fourth heaviest taxed, said Jerman.
Finally, Jerman said some Utahns may have noticed that Gov. Mike Leavitt in recent budget recommendations said that Utahns' tax burdens are at a 17-year low. But Jerman said the governor only took into account state taxes, not local taxes. Add those in and, as the Utah Taxpayers Association's tax history shows, Utahns' tax burden has become worse in recent years.
State and local government revenues dropped in 2001 and 2002, and legislators had to make up a $700 million revenue shortfall in state government over that period, which is not reflected in the new tax report.
Lawmakers avoided raising a general tax the past several years while approving hikes in the tobacco, beer and alcohol taxes. They also applied state and local sales taxes to cable and satellite TV bills.
Those tax hikes will be reflected in future tax-burden studies. But the economic downturn likely won't impact Utahns' tax burden rankings, said Jerman, because other states suffered likewise and raised some taxes and fees to make up their revenue shortfalls.
"We don't see the tax burden improving much" over the next few years, Jerman said. "Everyone wants the economy to grow, wages to grow. We hope for that also."
Page Modified: April 6, 2003