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Show Bracket creep boosts Utah tax bills Because of "bracket creep," average federal and state income tax bills for Utah residents climbed from 13.70 percent of gross income in 1970 to 15.17 percent in 1979. This was pointed out in a study just released by Utah Foundation, Foun-dation, the private tax research organization. Foundation analysts explain that the problem of "bracket creep" is caused by the interaction of inflation on the graduated income tax. As wages and salaries are adjusted for inflation, the taxpayer is pushed into progressively higher tax brackets, and the deductions and exemptions are worth less in real value. The net result is that taxpayers pay a higher proportion of their income for taxes, even though there may not have been any legislation change in the tax rates. Utah's state income tax is steeply graduated, especially at the lower 1 1 rr1 r: l rfi r-nn nnuuic icveis. nie nist $i,ouu ui taxalbe income for couples filing joint returns ($750 in the case of single individuals) in-dividuals) is taxed at 2.75 percent. All taxable income above $7,500 for joint . returns ($3,750 for single individuals) is taxed at 7.75 percent. Thus, the effective ef-fective tax rises sharply as individuals move into higher income brackets as a result of inflation. The study showed that "bracket creep" was most evident in connection with Utah's state income tax, which rose from 2.30 percent of adjusted gross income in 1970 to 3.12 percent in 1979, a climb of nearly 36 percent during the nine-year period. The proportion of gross income going for federal income taxes in Utah also rose from 11.40 percent in 1970 to 12.05 percent in 1979, a 6 percent increase in the period. According to the Foundation report, the reason for the much smaller rise in the federal tax percentage during the nine-year period is that Congress took action to reduce federal income taxes in 1970, 1975, 1976, 1977, and 1978. These successive reductions did counter the impact of "bracket creep" to some extent. Each adjustment, ad-justment, however, brought only temporary relief as the forces continued con-tinued to operate against tahe taxpayer. tax-payer. The study also points out that Congress and the Administration usually were able to take credit for "reducing taxes," when in reality the tax cuts only made temporary adjustments ad-justments in the built-in inflation tax. |