BUSINESS + ECONOMY

Utah economy ranked best in US, but taxes still take a bite

Sep 20, 2023, 7:00 PM

Image of the exterior of the Internal Revenue Service in Washington D.C. Two new reports give confl...

FILE - The exterior of the Internal Revenue Service (IRS) building in Washington on March 22, 2013. (Susan Walsh, Associated Press)

(Susan Walsh, Associated Press)

SALT LAKE CITY — Utah has ranked number one for the 16th year in a row for its economic outlook, according to a new report by Rich States Poor States. But while the state’s economic outlook looks healthy, when it comes to taxes, residents are paying more than the national average.

The Rich States Poor States report ranked New York as the worst state for taxes, with 15.9% of the state’s net product going to state and local taxes in 2022.

Despite Utah’s stellar ranking from Rich States, Poor States, a report from the  Tax Foundation placed Utah in 40th place. That organization said Utah has a 12.1% state-local tax burden.

Utah’s ranking in the Tax Foundation report was calculated after being compared to states with the lightest tax burdens: Alaska with 4.6%, followed by Wyoming at 7.5%, and Tennessee with 7.6%.

Utah taxes

The Utah Taxpayers Association released its annual ‘How Utah Compares’ report, which compares the percentage of personal income spent on taxes and fees in all 50 states.

The report revealed that Utahns pay 2.4% more of their personal income in total taxes than the U.S. average and an average of 3.38% more than neighboring states

Rusty Cannon, president of the Utah Taxpayers Association, confirmed to KSL NewsRadio that Utah’s tax burden is far higher than surrounding states. For example, Arizona ranks 15th or 9.5% in the state-local tax burden in 2022.

 

Lower my taxes

The most harmful tax, Cannon said, is the state income tax. He said downward pressure needs to be applied to it because that tax has been too high for too long.

Equally irritating to Cannon is property tax. He said the Utah Taxpayers Association is working with legislators for property tax relief bills this upcoming session.

Utah’s tax burden may eventually affect the state’s ability to attract new residents. Cannon said other states are chasing and passing Utah when it comes to a lighter tax burden for residents and businesses.

“States like Arizona and . . . North Carolina have done an amazing job. They’re attracting businesses and individuals. Everybody’s fleeing California, and we’re catching that here in Utah as well, but they’re going to a lot of other states as well.”

“And this starts to matter when your tax base isn’t growing like you want it to. And so that this is the stuff that we think about every day as sort of the tax nerds in the room, but it really does matter,” Cannon said.

The root of the problem of taxes is always the same, he said, and that is the growth of government spending on a state and local level year after year. It will remain the same until the conversation shifts to pushing back against that growth, Cannon said.

WalletHub offers a state-by-state look at the tax burden so far in 2023:

Source: WalletHub

Related: Calls to remove sales tax on food, Utah lawmakers say it’s complicated

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Utah economy ranked best in US, but taxes still take a bite