Utah group calls for tax reform

While taxpayers scrambled to finish their returns by Thursday's deadline, one local group blasted Utah's tax system as "antiquated and out of control."

In their annual "protest" on the April 15 tax deadline, officials at the Utah Taxpayers Association said the state's tax burden — which ranks ninth-highest in the nation — needs reform now.

With unemployment numbers down and an economy on the rebound, Utah's tax structure is prime for change, said Mike Jerman, vice president of the Utah Taxpayers Association.

"The timing is excellent for tax reform and tax reduction," Jerman said. "Utah is in a position to seriously talk about tax reform and cutting taxes."

State and local governments, as well as school districts, have been increasing taxes for the past couple years, Jerman said. More school districts are expected to raise property taxes by as much as $15 million this year because of Gov. Olene Walker's new reading program, he said.

Utah's tax burden will reach an all-time high because of new taxes and fees implemented the past couple years, Jerman said. "We've seen significant increases over the years," he said.

Chad Vanderlinden, a research analyst with the taxpayer group, said the typical Utah family pays more in state income taxes than federal income taxes and sales taxes, and twice as much as it pays in property taxes.

Jerman said recent federal tax cuts aided the recent economic surge.

"As the economy rebounds right now, we have to ask ourselves, 'Why is that happening?' " Jerman said. "The federal tax cuts have obviously played a large part in recovery.

"There's no question, in the long run we get higher economic growth with lower tax burdens."

The Utah Taxpayers Association presented three ideas to reform Utah's tax structure.

• Earned income tax credit for low-income families. Households earning less than $20,000 per year account for less than 3 percent of all paid Utah income taxes. "By reducing taxes on lower-income people, it will have a very small impact on state revenues as a whole."

• Bracket adjustments and indexing tax brackets for inflation. Utahns pay $4 million per year above and beyond inflation because the state refuses to annually index tax brackets for inflation, Jerman said. The federal government has been doing it for more than 20 years. "The lack of indexing tax brackets leads to higher burdens in the long run," Jerman said.

• Means-tested tuition tax credit. Utah will never be able to match other states in per-student spending unless it is willing to nearly double existing income tax burdens. "Of course, the economic consequences of doubling our income tax burden would be catastrophic," Jerman said. A tuition tax credit would allow low-income families more choices in how to educate their children, he said.

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