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Utah's tax burden is at its lowest point in 20 years. But poor and middle-class Utahns pay nearly twice as much of their earnings for tax as do the wealthiest 1 percent.
Some groups are already pointing to the relatively low tax burden as a sign that Utah could afford a tax increase for education. It could also fuel ongoing discussion by state legislators about raising gasoline tax for transportation this year by perhaps 10 cents a gallon.
A new Utah Foundation report said Utah's burden for taxes and fees by state and local governments was $111.60 per $1,000 of personal income in 2012, the lowest in 20 years.
That is down by more than $8 per $1,000 in income since 2008 when, ironically, the state hit its largest tax burden in 20 years.
"Most of that can be attributed to the tax cuts that happened in 2007 when the Legislature reduced both income taxes and sales taxes," including tax on food, said Christopher Collard, Utah Foundation research analyst.
Matthew Weinstein, fiscal policy director for Voices for Utah Children, said Utah's relatively low tax burden shows that officials may not be raising enough revenue to support critical social services and education, and it may be time for a tax hike.
"We used to be in the Top 10 for our education funding effort [as a share of income]. We've fallen off of that top-10 list," he said, adding that student performance has also dropped.
"Our children are paying a price," Weinstein added. "We need to be prepared to invest in our state, invest in our future, invest in our children."
Michael Sullivan, with the Governor's Office of Economic Development, said generally resisting the temptation to raise taxes during the recession and its aftermath helped the state's economy avoiding a drag on it that hurt other states.
"We think that's important to consider in the debate" whether and how much to raise taxes, he said. Sullivan said lower taxes fueled the economy naturally so that it produced extra revenues without raising tax rates.
He added while he is not necessarily opposing tax hikes, "We urge that we consider staying the course in the option of providing resources and incentives for businesses to grow to pay more taxes, for citizens to increase their net income."
Collard said the Utah Foundation report also found the state government's tax burden "has been decreasing on average by 62 cents every year for the past 20 years, while Utah's local tax burden has been increasing by 17 cents every year."
The study found a trend where most of the burden is being shifted from taxes to "mandatory fees," such as those for water, sewer, libraries, college tuition, school lunches and golf, he said.
"Back in 1993, fees consisted of about one-fourth of Utah's tax burden. By 2012, they had moved up to one third of the tax burden," Collard said.
Stephen Kroes, president of the Utah Foundation, said that is probably because it is easier politically to raise a fee than a tax. He notes that raising property taxes, for example, requires mailing notices to homes and public hearings, which often lead to heated meetings. Raising a fee has no such strict requirements.
Meanwhile, the Institute on Taxation and Economic Policy study found that middle- and low-income people in all 50 states pay substantially more of their income for state and local taxes than do the top 1 percent of households.
In Utah, it figured the poorest 20 percent of the population pay 8.6 percent of their income for state and local tax. The middle 60 percent pay 8.4 percent, according to the study. But the top 1 percent pay only 4.8 percent.
"Upside-down state tax systems didn't cause the growing income divide, but they certainly exacerbate the problem," said Matt Gardner, executive director of ITEP.
Kroes said some recent trends in Utah taxes may work both ways to narrow or widen the tax burden gap between rich and poor.
In 2007, the Legislature cut sales taxes, including those on food, which helped the poor.
But Kroes said the trend to generate more revenue through fees hurts these same people, because the fee tends to be the same for anyone rich or poor and it amounts to a smaller share of income for the wealthy.
Utah ranked No. 34 in ITEP's "tax-inequality index." The lower the ranking, the more equitable a state's tax system is in that study so Utah was essentially the 16th best.