Utah has experienced tremendous growth in the past few decades, including being the fastest growing state in population according to the 2020 Census Bureau data. Along with the benefits of massive job growth, wealth, and an increase in wages, Utahns are feeling growing pains.
These pains have made it painfully clear that all Utahns need financial relief. Three areas of financial strain are putting enormous pressure on Utahns – inflation,housing prices, and property tax increases.
According to our annual report, “The Beehive Family”, which details what the typical Utah family pays each year in taxes, state income tax is the 3rd highest tax burden they face (social security tax and property tax are the highest burdens). Providing state income tax relief to all taxpayers in Utah with a significantly lower income tax rate would help alleviate that pressure.
While we commend the Legislature for providing income tax relief to some Utahns in the past few years, it’s time to take meaningful action if we want our kids to be able to continue to live and grow here.
First, let’s look at the inflation picture. Massive increases in the prices of necessities like food and fuel as well as many other areas of consumer spending have sprung up over the last year or so.
One indicator of inflation is the Producer Price Index, or PPI, which is showing no signs of slowing at this point. While this measurement is related to the prices producers of goods are paying for their materials, most of that inflation creeps into consumer end pricing and a duplicate rise in the Consumer Price Index has also happened.
For example, here are some charts documenting the sharp rise in prices for necessary items like meat, poultry, fish and eggs:
This unprecedented rise in the cost of living is putting a strain on the finances of all Utahns. It is especially painful with the increases in the items we all need to live, like food, fuel and transportation.
Another area that is crushing Utah residents is housing. Not only have prices risen sharply over the last several years, they have skyrocketed in 2020-2021.
According to the Federal Housing Finance Agency (FHFA) housing prices in Utah have risen a staggering 28.3% in just the last year alone.
Many Utah residents who are first time home buyers or have not been sitting on a pile of home equity over the last few years are being completely priced out of finding a home that they can afford. Homes are snapped up within minutes of being listed, often at prices well above the asking price. With limited land and labor and supply constraints, there appears to be no end in sight.
I worry about my kids when they are grown and whether or not they’ll be able to afford to live nearby, or even in this state. I know many parents have similar concerns as their children age not being able to achieve the traditional version of the American dream like previous generations have been able to.
In addition, your Taxpayers Association receives calls all year long from seniors who are being priced out of their homes because of rising property taxes.
While we fight unjustified property tax increases throughout the year, it is impossible to stall them all. With so many on a fixed income, even a relatively minor increase in their property taxes could be the difference between food or holding onto their homes.
As an aside, your Taxpayers Association has been engaged in drafting legislation that would provide more direct property tax relief to seniors while still ensuring local governments can continue to function. The legislation would create a set of guidelines for allowing property owners to defer their property taxes until the title is changed. Expect to see that for the 2022 General Session.
These are just a few of the reasons that all Utah taxpayers need relief. Significantly lowering the income tax rate helps ALL taxpayers in Utah in the short and long term and will help defray some of the major increased costs our children and seniors are experiencing. .
With the continued strong economy in Utah despite the pandemic, state coffers are swelling with revenue. Based on our research, we think Utah will be looking at an additional $1.5 billion in available ongoing revenue for the next fiscal year as well as over $1 billion in new available one time revenue.
There is ample revenue in state tax collections to cut the rate to 4.5% during the upcoming 2022 legislative session and still provide healthy spending increases to education and other needs. As this becomes clearer to policymakers, your Utah Taxpayers Association will continue to advocate for that needed relief.