Revenue • Utah should consider a refundable state earned income tax credit for low and middle-wage earners, advocate says.
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A new report evaluating who pays a bigger share of their income in state and local taxes revealed that low-income Utahns give more than nine cents of every dollar to the government, compared to a nickel from the state's top one percent.
On Wednesday, the Washington-based Institute on Taxation and Economic Policy (ITEP) released the fourth edition of Who Pays? A Distributional Analysis of the Tax Systems in All 50 States.
"The good news is that Utah is not among the most regressive states," Allison Rowland, budget and research director for Voices for Utah Children said in a statement. "The bad news is that Utah's lowest earners are still paying a much larger share of their incomes . . . than are the highest earners."
Rowland suggests Utah lawmakers, now in their first week of the state's 45-day legislative session, consider adopting a refundable state earned income tax credit for low and middle-wage earners.
According to Who Pays?, Utah's bottom 20 percent pay 9.4 percent of their income in state and local taxes including income, property, sales and excise taxes. The middle 20 percent pay 8.7 percent and the top one percent pay 5 percent.
Utah fares slightly better than the national average: the bottom 20 percent pay 11 percent, the middle 20 percent pay 9.4 percent and the top one percent pay 5.6 percent.
Low-wage earners fared the worst in the state of Washington, the report said, with the bottom 20 percent paying out 16.9 percent of their income in taxes. Wyoming's top one percent enjoyed the nation's lowest rate, paying only 1.6 percent of their income in state and local taxes.
ITEP aims to inform elected officials and the public about the effects of current and proposed tax policies, focusing primarily on tax fairness and sustainability.
"We know that several governors are promising to cut or eliminate taxes, but the question is who's going to pay for it," ITEP Executive Director Matthew Gardner said in a statement. "In too many states, low-income people will be asked to make up the revenues lost to income tax cuts that overwhelmingly benefit the wealthiest taxpayers."