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Show New Federal Ten Per Cent Surtax May Cut Utah's State Tax Income The 10 per cent Federal surtax enacted by Congress will coat Utahns 825 million over the next twelve months, according to an analysis released by Utah Foundation, the private tax research organization. The tax hike will Increase the Federal tax bill for the average family of four with an 88,000 annual income by 877 JO per year. Foundation analysists point out that the Federal tax increase could reduce normal state revenue colletions by as much as 82.125.000 per vear. This would Include an estimated lees of 81.000.000 in state income taxes, 8750,000 In corporate franchise taxes, and 8500.000 in state sales taxes. Revenue to the state from income taxes will be affected by the Federal surtax because Utah taxes only Income remaining after Federal taxes are paid. If more Federal taxes are paid, there will be less remaining for the state to tax. The Foundstlon points out. however, that if the present state wit ho dine rate should remain In effect after the Federal tax hike goes Into effect, the "windfall'' in added state withholding collections could ( continued inside ) New Federal Ten Per Cent Surtax May Cut Utah's State Tax Income ( continued from tront page I more than offset any reduction In state collections later on. At the present time, the State Tax Commission imposes a state withholding tax equal to 14 per cent of the Federal withholding tax. With the imposition of the Federal surtax, a continuation of this 14 per cent state rate would result In added state withholding collections of $3,500,000 over the next twelve months Part of this added revenue, of course, would be refunded next April when Utahns file their 196fl state tax returns The Utah State Tax Commission could by administrative order reduce the state withholding percentage to correspond more nearly with the lower state Income tax liability for Utah citizens. The Utah law specified an original withholding rate of 7 per cent of the Federal withholding, with authority given to the Tax Commission to adjust the rate to probable requirements The rate has been Increased twice to reflect higher tax rates and or changes In the Federal withholding schedules |