Utah is unique when it comes to levying the property tax. While all states impose the property tax and use both rates and property values to determine the amount paid by a property owner, Utah also looks at revenue generated by the property tax from the prior year. For those that aren’t familiar with Utah’s Truth in Taxation law that has been in existence since 1985, it has been a hidden gem in keeping property taxes low in Utah.
Under Truth in Taxation, the certified tax rate ensures taxing entities only receive the previous years property tax revenue plus any new growth (new rooftops, buildings). If entities want to collect more revenue by exceeding the certified tax rate, they must go through the Truth in Taxation process, in which taxpayers are sent notices that quantifies what the tax increase mean to their property taxes and hold a public hearing. During that public hearing, elected officials have the opportunity to make their case as to why they feel they need to raise taxes. It is a great process that makes sure tax decisions are done in the sunshine. It doesn’t prevent any taxing entity from raising taxes , it simply ensures that it is done with full disclosure.
Recently, the Washington, D.C.-based Tax Foundation published their annual “Business Climate Index”, which once again shows Utah as one of the best states for its property tax laws in the nation. Utah’s 2020 rank is #5, a rank that Utah has now held for over 4 years in a row. The ranking takes into account taxes on capital stock, tangible and intangible property, inventory, real estate transfers, estates, inheritance, and gifts
Your Taxpayers Association has heard from many members, as well as individuals across the state saying how arduous the tangible personal property tax is for their businesses. So we successfully advocated for a $15,000 exemption in the personal property tax in the 2019 General Session. This will provide relief for thousands of small businesses that are often subject to audits to find the cost and depreciation for office items that are integral to their business operations.
The differences by region in economics, politics and tax policy throughout the various states can be seen in the map. Virtually all of the worst ranked states are in the upper northeast corner of the country and all of the best ranked states are in the west or midwest (New Mexico, Indiana, North Dakota, Idaho and Utah).
The Tax Foundation’s ranking is another validation for Utah’s Truth in Taxation law, which your Taxpayers Association worked to enact in 1985. This study provides yet another reason to adamantly defend this law from being weakened.
To read the full report, click here.