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Show Utah Foundation Utah Income Tax Relatively High Utah's individual income tax appears to be somewhat higher than that of most other states. This conclusion was reached by Utah Foundation, the private tax research organization, in an analysis of the state's individual in-dividual income tax. The state individual income tax along with the corporate income tax help support the state minimum school program. According to the Foundation Foun-dation study, state income tax collections in Utah last year were equal to 2.41 percent of total personal income payments to all individuals in the state. This percentage compares with 1.87 percent for the entire United States and 1.63 percent for the eight Mountain States. Utah ranked 14th among all of the states in the percentage of personal income going for payment of state individual income taxes. The study notes that the state income tax burden in Utah is relatively high at gross income levels up to $30,000 per year. Approximately Ap-proximately 95 percent of the families in Utah have gross incomes below $30,000. Utah's state individual income tax employs a rather steep progression of rates up to $7,500 of taxable income. For a family of four, a state taxable income of $7,500 per year is equal to a gross income in-come of at least $13,622 per year. While there have been some proposals to continue the present progression of rates beyond the top bracket of $7,500 and the top tax rate of 7 percent, the Foundation Foun-dation analysis indicates that such a change would not produce substantial amounts of added revenue. If the present graduation were continued to 10 percent, state income tax revenue in Utah would be increased by only 9 percent. Even if the graduated rates were extended all the way to 15 percent (more than doubling the present maximum rate), the added revenue would only amount to about 16 percent. Foundation analysts explain that Utah basically has a middle-income economy, without the drastic extremes found in many of the other states. Thus, high progressive income in-come tax rates on upper income brackets will not produce the same tax yeild as the same tax system would in a state with large income extremes. Utah's progressive state income tax more than offsets off-sets the regressive state and local sales tax. A Foundation analysis of taxes paid by typical Utah families reveals that combined income in-come and sales tax in Utah amount to 3.6 percent of gross income for the poverty-level family, 4.2 percent for the low-income family, 5.1 percent for the middle-income family, and 5.5 percent for the high-income high-income family. When Federal income and payroll taxes are included, the progressive relationship becomes even greater - 9.7 percent of gross income for the poverty-level family, 15.3 percent for the low-income low-income family, 21.9 percent for the middle-income family, and 25.4 percent for the high-income family. These comparisons, however, do not include property taxes, sales taxes paid on large or unusual purchases, and other direct and indrect taxes imposed by Federal, State and local government units. The study observes that Utah's state individual income in-come tax, which originally was enaced in 1931, was not considered a good revenue producer in the early depression days. During the more recent high-inflation period, however, it has become a major revenue producer and now ranks behind only the sales tax and the property tax as a source of state and local tax revenue in Utah. Since its enactment in 1931, the cumulative yield from the individual income tax in Utah has amounted to $1,355,000,000, with more than half this total, or $683 million, being realized within the past five years. During the fiscal year ended June 30, 1978, individual income tax receipts totaled nearly $180 million. |