PRESS RELEASE
September 15, 2006

Contact: Stephen Kroes, Executive Director
(801) 355-1400, ext. 5
(801) 573-8824 (mobile)
steve@utahfoundation.org

Printable Version

UTAH’S TAX BURDEN IS OFTEN OVERSTATED – AN IMPROVED MEASURE RANKS UTAH 14TH, RATHER THAN 5TH HIGHEST

Today, Utah Foundation releases its September research report examining Utah’s tax burden over a 12-year period compared to other states. The report finds that the common method of counting all taxes and government fees significantly overstates Utah’s tax and fee burden. A more appropriate accounting of taxes and mandatory government fees is provided, showing Utah ranked 14th highest in the nation with a total burden of $124 per $1,000 of personal income. The report, entitled "Utah’s Tax Burden: Excluding Non-Compulsory Fees Provides a More Accurate Ranking" is attached to this release. It is also available at www.utahfoundation.org/research.

In past reports, Utah Foundation has calculated tax burden based on all taxes and fees paid to Utah state and local government. In recent years, Utah’s ranking using that measure has increased dramatically, generating questions about whether that is an accurate measure. Using the latest national data (from the 2003-04 fiscal year), Utah would rank fifth highest in the nation by that measure of tax burden.

However, many government fees are not mandatory exactions on taxpayers, but are competitively priced, optional services taxpayers may choose to purchase from government or the private sector. The largest of these fees are public college tuition and medical charges at public hospitals. Other, smaller fees in this category include charges for services such as golfing, auto parking, school lunches, and recreation programs.

Because Utah’s college enrollments increased at the sixth fastest rate in the nation from fiscal year 1997 to 2004, the increase in tuition revenues was exaggerating the growth in Utah’s "fee burden."

In this report, Utah Foundation recommends excluding tuition and other optional fees from the calculation of tax and fee burden. Including only mandatory fees along with taxes provides a better depiction of the burdens shouldered by taxpayers. Using this measure, Utah’s tax and fee burden ranking has remained basically flat since 1997, ranging from 16th to 14th highest.

Other highlights from the report include:

• Utah’s tax and fee burden ranks fourth highest among western states, behind Wyoming, California, and Nevada.
• Utah ranks low in property taxes and corporate income taxes.
• Utah ranks fairly high in motor fuel taxes and in mandatory fees.
• Utah’s sales tax burden, which was ranked in the top 10 in past reports, has fallen to 13th.
• Utah individual income taxes rank 17th.

Considering the change in ranking, Utah Foundation Executive Director Stephen Kroes said, "We’re not trying to say Utah’s overall tax burden is low, but it’s certainly not as extreme as being in the top five nationally. Nevertheless, comparing to the typically low tax burdens in the West, Utah does stand out, ranking fourth highest among the 11 western states."

Utah Foundation is a public policy research group that promotes a thriving economy, a well-prepared workforce, and a high quality of life for Utahns through research and practical, well-reasoned recommendations for policy change.