Most Utahns paid more state income tax this year than last - they aren't happy about that - and 38 percent say they'd be more likely to vote for a gubernatorial candidate who promised to cut state income taxes, a new Dan Jones & Associates poll says.
Now do you see why Gov. Norm Bangerter, Democrat Ted Wilson and independent Merrill Cook want to return surplus income tax revenues?In an April 21 survey taken for the Deseret News and KSL-TV, Jones found that 56 percent of Utahns paid more state income tax for 1987 than they did for 1986. Twenty-four percent said they paid about the same. Only 12 percent said they paid less state tax. Strangely, 8 percent didn't know if they paid more or less.
The fact that 56 percent paid more state tax "doesn't surprise me," said Utah Tax Commission Chairman Hal Hansen. "The Legislature raised the income tax, so people are going to pay more."
Actually, lawmakers didn't raise income tax rates. But they and Bangerter did do away with the deduction for federal income tax paid on state returns; the equivalent of an automatic tax increase. To offset some of that increase, they also raised the standard deduction and personal exemptions, which reduces people's taxable incomes. Those changes, along with federal tax changes, resulted in higher tax bills for most Utahns, Jones found.
Legislators believed that by raising the standard deduction and personal exemptions, many lower-to-middle income Utahns would see tax reductions. General speaking, Hansen said for a family of four with a mortgage the break even point is $45,000. You make more than $45,000, you pay more state tax. You make less, you pay less tax.
But Jones found that only 20 percent of those who made $15,000 a year or less paid less state tax, while 29 percent of those lower-income people paid more state tax.
As income went up, more people paid more tax: 45 percent paid more in the $15,000-$20,000 income range, 55 percent paid more in the $20,000-$30,000 income range, 63 percent paid more in the $30,000-$40,000 range and 73 percent - almost three-fourths of all those questioned, paid more if they made $40,000 a year or more.
"We believed that many people would pay more state tax, but less federal tax," Hansen said. In the aggregate, lawmakers thought that federal tax decreases would be offset by state tax increases. A kind of a wash.
Since Utahns are no longer required to file a copy of their federal returns along with their state returns, the commission doesn't know yet for sure which Utahns paid more, less or about the same federal tax.
But Jones found that only 23 percent of those responding to his survey paid less federal tax in 1987. Thirty-nine percent paid more, 31 percent paid about the same.
"Since 56 percent paid more state tax and only 23 percent paid less federal tax, it doesn't sound like that (a wash when state and federal tax are combined) happened," Hansen said.
Many of the Utahns who paid more federal tax also paid more state tax - a double whammy many state lawmakers have been hearing about since the April 15 income tax filing deadline.
The state has more than $70 million in state income tax surplus this year (the final figures aren't in yet). Bangerter will call a summer special legislative session in an effort to return that money. He says a promise was made when he and lawmakers raised taxes by $160 million last year that any unexpected surplus would be returned. The returns, whether in the form of a rebate or refund, should average $120-$140 per taxpayer, said Reed Searle, Bangerter's chief of staff.