Video Courtesy of KSL.com
November 15, 2010
Utah isn’t quite in the “middle” of the renewed congressional debate on extending the Bush tax cuts.
Middle here means something far different than the middle on the East and West coasts — something far more humble than the $250,000 upper middle-class number that figures prominently in the tax debate.
The average median income for Salt Lake County for 2010 is $70,000, according to the county’s website.
“If that’s the median, $250,000 seems like an awful lot of money,” said Glenn Bailey, executive director of Crossroads Urban Center, which advocates for low-income Utahns.
A Utah household earning $250,000 a year “would be pretty comfortable,” says Royce VanTassell, vice president of the Utah Taxpayers Association.
But there are precious few of those in the Beehive State, says Matt Lund, tax economist for the Utah Tax Commission. “Only 1.2 percent of people are impacted above the $250,000 a year mark — so a very small percentage of Utah taxpayers.”
Jeff Thredgold, economist for Zions Bank, says defining the middle class can be problematic depending upon where one lives.
A middle-class income in Utah, however, would be in the range of $75,000 to $150,000 a year. “I’d say those numbers are reasonable across the country in terms of middle class,” he said.
Average middle-class incomes in major cities on the East and West coasts — New York City or San Francisco for instance — are considerably higher because housing costs so much more.
Tom Bingham, president of the Utah Manufacturing Association, said the debate is more complex than most people understand.
For instance, the average Utahn who was told that a household income of $250,000 was considered middle class — albeit upper middle class — they’d likely say such households “don’t need a tax cut.”
“I’m guessing that 90 percent of small businesses in this state are Sub-S corporations or limited liability corporations that pay income tax on the same basis you and I do at home,” Bingham said. For them, the tax debate has significant consequences because small businesses provide a significant number of jobs and fuel economic growth.
If Congress does nothing, the tax rates would revert to higher 2000 levels, So the stakes are high says James A. Wood, director of the Bureau of Economic and Business Research at the University of Utah.
“If you let all of them expire, it means about $3-plus trillion in revenue so it’s substantive. At some point we’re going to have to increase taxes because we’ve got a debt and a deficit we have to manage with more responsibility, and we’re going to have higher rates of taxes,” Woods said.
Since so few Utahns have household incomes above $250,000 a year, the tax cut debate likely won’t affect their personal tax burdens. But if Congress doesn’t act, they could be affected by the stock market reacting to Congress’ inaction.
“If allowed to expire across the board, pretty much everyone will feel it in some way,” said Lund.