Utah's tax burden hefty

Utahns are carrying the fourth-largest state and local tax burden in the United States, a taxpayer watchdog group says.

The Utah Taxpayers Association, which is supported mostly by local businesses, says that for fiscal year 2004 (the last available tax revenue year across the country), Utahns on average paid 15.32 percent of their personal income to state government and to local governments and taxing entities — such as cities, counties and school districts.

That is a greater state and local tax burden than any time in the 10 years from 1994 to 2004, UTA Vice President Mike Jerman says.

The new study reflects the feelings of most Utah legislators — taxes must be cut — says Senate President John Valentine, R-Orem. "The tax burden is one reason we wanted significant tax cuts in the 2006 Legislature," Valentine said Thursday afternoon.

Lawmakers gave a $70 million cut via a halving of the state's share of the sales tax on unprepared food, which will take effect Jan. 1.

Another $20 million came in business tax cuts aimed at stimulating the Utah economy.

But legislators and GOP Gov. Jon Huntsman Jr. could not agree on how to give a $70 million cut in the state income tax — and while money was put aside for the cut, income taxes in 2006 were not reduced.

Even though GOP legislators, many of them up for re-election this year, are leaning on Huntsman to just give an across-the-board, small-rate reduction in the current 7 percent state income tax, the governor says he will hold the line for a "fairer, flatter" personal income tax reform of approximately 5 percent.

House Speaker Greg Curtis, R-Sandy, said most House members likely would accept a bifurcated personal income tax — those who would benefit most financially from his 5 percent tax can choose that tax form, while those who want to stay with the current 7 percent system (which has more deductions and exemptions) can choose that one.

But Valentine said that most senators can't accept that, in large part because no one can tell them for sure what that "reform" tax cut will mean.

"We don't know if that is a $70 million loss in state revenue or $235 million," Valentine said. "Personally, I've worked out some numbers at $130 million."

Jerman's new report doesn't reflect the recent tax cuts, since it includes state and local taxes paid from July 1, 2003, to June 30, 2004.