howardnlby Howard Stephenson
Utah’s state and local tax burden as a percent of personal income rose from 10th highest in the nation in FY 1999 to 9th highest in FY 2000, according to the Utah Taxpayers Association.

Every year the Taxpayers Association calculates tax burdens for all fifty states based on the Census Bureau’s State and Local Government Finance report. FY 2000 is the most current data available. I thought readers would like to know how Utah taxes compare among the fifty states so the next time the legislature or local governments propose tax hikes, you’ll be armed with the facts.

State & Local Taxes – 9th highest, 7% higher than national average.

Utah’s tax burden excluding fees, increased from 11.4% of personal income to 11.6%. Most of this increase is attributable to an increase in the individual income tax burden. In the previous year, Utah ranked 10th highest and was 6% higher than the national average

Total Taxes and Fees – 10th highest, 12.5% higher than national average.

Utah’s total tax and fee burden, rose from 15.2% to 15.3% in FY2000. Alaska has the highest tax burden at 16.7% followed by New York, New Mexico, and Wyoming. However, residents in Alaska and Wyoming pay no state income taxes, and both states are able to “export” taxes due to taxes imposed on natural resources such as oil, natural gas, and coal.

Motor Fuel Taxes – 7th highest, 71% higher than the national average.

Utah’s motor fuel tax burden remained 7th highest at 0.65% of personal income compared to 0.38% for the U.S. High motor fuel tax burdens are common in mid-western, southern, and Rocky Mountain states with high growth rates. Montana maintained the highest motor fuel tax burden at 0.94% of personal income followed by Mississippi, North Dakota, Idaho, Arkansas, South Dakota, Utah, West Virginia, Wisconsin, and Wyoming.

General Sales Taxes – 9th highest, 36% higher than the national average.

Utah’s general sales tax burden fell from 8th highest to 9th highest but at 3.62% of personal income remained well above the national average of 2.66%. Washington, which has no income tax, has the highest general sales tax burden at 4.89%.

Individual Income Taxes – 13th highest, 24% higher than the national average

Utah’s individual income tax burden jumped from 16th highest to 13th highest. In the previous year, Utah’s individual income tax burden was 22% higher than the national average but is now 24% higher. Utah’s individual income tax burden is now 3.25% of total personal income, a significant 14% increase from 2.86% in 1993. At 4.49%, New York continues to have the highest individual income tax burden.

Property Taxes – 35th highest, 16.9% below the national average Utah’s property tax burden increased 3.3% from the previous year and moved up from 36th highest to 35th highest. At 2.57% of personal income, Utah’s property tax burden is the only tax burden where Utah ranks below the national average. Proponents of increased government spending frequently call for property tax increases, citing Utah’s comparatively low property tax burden as justification. However, if Utah’s property tax burden were increased to the national average and all other tax burdens were not changed, Utah’s total tax and fee burden would rise to fourth place.

A Note on Measuring Tax Burdens

Tax burdens can be measured in several ways: as a percent of personal income, as a percent of gross state product, per capita, or per worker. Measuring tax burdens as a percent of personal income or gross state product is the most accurate measure of government’s share of the state’s economy and is the measure most frequently used by economists. Per capita or per worker measurements can lead to misleading conclusions, especially in Utah’s case where the “per capita” numbers include a high proportion of children who are not in the workforce. Per capita measurements do not account for wage differences between the states. For example, a $3,500 per capita tax burden is more burdensome in a low wage state like Utah than a high wage state like Connecticut.

Most significantly, however, per capita measurements include non-wage-earning children, particularly under age 16, who are tax consumers instead of taxpayers.

Per worker measurements do not account for the variations in workforces. Compared to the rest of the nation, Utah’s workforce contains a higher percent of part-time teenage workers. Utah has more teenagers per capita than any other state, and 62% percent of Utah’s teenagers are employed compared to 52% nationwide.

Get a Copy of the Full Report

Every year the Utah Taxpayers Association produces the How Utah Compares report in which Utah’s tax burdens are compared to other states. The complete report is on the Association’s website at www.utahtaxpayers.org.