Our 2023 How Utah Compares report, published in September, challenges the narrative that Utah’s tax burden is extraordinarily low by comparing the percentage of personal income devoted to various taxes and fees to that of each of the 50 states and the nation as a whole. Although Utah boasts high rankings in reports on economic outlook and affordability, the reality is that Utahns spend about 2.4% more of their personal income in taxes and fees than the national average.
Utah’s three-legged stool, comprising income tax, property tax and sales tax, allows for a broad base and a low rate across these main tax categories. While our gold standard Truth in Taxation policy encourages a low rate of property tax, Utahns pay 140% of the US average in income tax, and 122% of the US average in general sales tax.
To remain competitive, Utah has work to do.
Because taxation is a function of government spending, tax cuts should be preceded by the curtailing of expenditures. Our Pork Barrel report, set to be released later this year, will highlight specific areas where both one-time and ongoing spending has proliferated on a state level. However, counties, cities, school districts and special districts also levy – and spend – taxes and must be held accountable for expanding budgets. Expensive recreation centers, risky municipal fiber projects, and extravagant K-12 and higher education school buildings are examples of excessive spending which necessitate higher taxes.
With trimmer budgets, taxing entities – including the state – could pass the savings on to taxpayers in the form of lower rates. Lower income tax means more money in your paycheck; lower sales tax means a lower total on your store receipt; lower property tax means retirees are not priced out of their homes. Combined, a lower tax burden also means Utah becomes a more attractive place for businesses to invest in, families to move to, and residents to live.
The findings of our report may be surprising, but if serious action is not taken to lessen the burden placed on taxpayers, Utah will find itself lagging further and further behind other states. Constant progress is the only way to maintain our position as a frontrunner in economic outlook, and your Utah Taxpayers Association works to encourage that progress.