In five years, Utah lawmakers have cut income taxes to the tune of about $1.4 billion.
Many conservatives believe the income tax inhibits growth and productivity. There is some truth to the old saw that says if you want less of something, tax it more.
But now a new report by the research group WalletHub shows Utah, despite its tax cuts in recent years, still ranks among the nation’s highest-taxed states.
WalletHub examined each state’s tax burden, or the proportion of total personal income rerquired for state and local taxes. Utah came in 14 highest. It did best in property taxes, finishing 36th highest, but not so good in sales and excise takes, at 14th, and worst in income taxes, at 11th. However, eight states have no income tax at all, and Utah’s burden was measured at only 3.3% of personal income, which hardly seems onerous.
Many conservatives believe the income tax inhibits growth and productivity. There is some truth to the old saw that says if you want less of something, tax it more.
But now a new report by the research group WalletHub shows Utah, despite its tax cuts in recent years, still ranks among the nation’s highest-taxed states.
WalletHub examined each state’s tax burden, or the proportion of total personal income rerquired for state and local taxes. Utah came in 14 highest. It did best in property taxes, finishing 36th highest, but not so good in sales and excise takes, at 14th, and worst in income taxes, at 11th. However, eight states have no income tax at all, and Utah’s burden was measured at only 3.3% of personal income, which hardly seems onerous.
There were no surprises here. These figures roughly correspond to a report the Utah Taxpayers Association published in 2022, which also ranked Utah 11th in income tax burden.
However, it means Utah lawmakers no doubt will continue trying to nibble away at the income tax (a poll by the Deseret News and the Hinckley Institute of Politics found that 87% of Utahns favor it).
Astute readers are probably already asking themselves, “Hey, wait! Wasn’t Utah the fastest-growing state in the nation during the last decennial census? Can you do that with a high tax burden?”
The short answer is yes. Alaska, Wyoming and South Dakota tend to rank as great, low tax-burden states. What they also have in common is that people aren’t exactly clogging the highways to move there.
You also can attract people despite rapidly rising housing prices, of which Utah has plenty.
Recently, a poll by Phoenix-based Noble Predictive Insights found that 58% of Utah voters under 30 agreed they had considered moving to another state because housing is so expensive.
When all ages were considered, the percentage agreeing with that statement dropped to one third – still a significant amount. Zillow reports the average home price in Salt Lake County is $558,531. It’s $535,721 in Utah County, and a whopping $1,306,303 in Summit County.
But, apparently, there is a difference between considering moving and actually doing so.
I contacted Natalie Gochnour, an associate dean in the David Eccles School of Business and director of the Kem C. Gardner Policy Institute at the University of Utah. She said data shows Utah has now had 33 of 35 years of net in-migration — that is, years in which more people moved in than out. Some of the strongest in-migration years have been during times of rapid appreciation in housing markets.
“Our data has always shown the strongest motivator of in-migration is opportunity (or jobs),” she told me in an email. “After that, we see schooling and retirement as the biggest factors.”
Taxes, she said, tend to be one of many factors influencing where people move, but it isn’t a core factor.
I’m guessing those factors might include anything from the weather, crime rates and city amenities, to education systems and a variety of other things, including reputation and impressive mountains. But most of all, it tends to be whether someone offers you a good-paying job.
Chasing the movers can be a difficult task. For one thing, they’re becoming hard to find.
As the Census Bureau recently reported, fewer Americans are moving these days than at any point since it started keeping those records.
As Michael Mazerov, senior fellow at the Center on Budget and Policy Priorities, wrote in a blog post two years ago, “Most people in the U.S. plant roots in the places they live, and it takes a lot to uproot and move across state lines.” Rarely, he said, do they do so because of tax rates.
Conservative politicians might counter by noting that, while this may be true for people, businesses do relocate for those reasons, and they often bring employees with them.
So, don’t expect the tax-cutters, here and elsewhere, to stop. At the start of this year, according to the Tax Foundation, nine states enacted cuts to their individual income tax rates, with two of them shifting to flat taxes similar to Utah’s, while three states cut their corporate income tax rates. It could get crowded at the top of these studies in the future.
That’s not a bad thing. Regardless of whether it attracts more move-ins, people like to keep more of their own money, so long as basic services are funded.
We should wish Washington, in its current eagerness to fire workers and gut departments while still running up deficits, would become as conscious of the burdens it imposes on people as many states seem to be.
However, it means Utah lawmakers no doubt will continue trying to nibble away at the income tax (a poll by the Deseret News and the Hinckley Institute of Politics found that 87% of Utahns favor it).
Astute readers are probably already asking themselves, “Hey, wait! Wasn’t Utah the fastest-growing state in the nation during the last decennial census? Can you do that with a high tax burden?”
The short answer is yes. Alaska, Wyoming and South Dakota tend to rank as great, low tax-burden states. What they also have in common is that people aren’t exactly clogging the highways to move there.
You also can attract people despite rapidly rising housing prices, of which Utah has plenty.
Recently, a poll by Phoenix-based Noble Predictive Insights found that 58% of Utah voters under 30 agreed they had considered moving to another state because housing is so expensive.
When all ages were considered, the percentage agreeing with that statement dropped to one third – still a significant amount. Zillow reports the average home price in Salt Lake County is $558,531. It’s $535,721 in Utah County, and a whopping $1,306,303 in Summit County.
But, apparently, there is a difference between considering moving and actually doing so.
I contacted Natalie Gochnour, an associate dean in the David Eccles School of Business and director of the Kem C. Gardner Policy Institute at the University of Utah. She said data shows Utah has now had 33 of 35 years of net in-migration — that is, years in which more people moved in than out. Some of the strongest in-migration years have been during times of rapid appreciation in housing markets.
“Our data has always shown the strongest motivator of in-migration is opportunity (or jobs),” she told me in an email. “After that, we see schooling and retirement as the biggest factors.”
Taxes, she said, tend to be one of many factors influencing where people move, but it isn’t a core factor.
I’m guessing those factors might include anything from the weather, crime rates and city amenities, to education systems and a variety of other things, including reputation and impressive mountains. But most of all, it tends to be whether someone offers you a good-paying job.
Chasing the movers can be a difficult task. For one thing, they’re becoming hard to find.
As the Census Bureau recently reported, fewer Americans are moving these days than at any point since it started keeping those records.
As Michael Mazerov, senior fellow at the Center on Budget and Policy Priorities, wrote in a blog post two years ago, “Most people in the U.S. plant roots in the places they live, and it takes a lot to uproot and move across state lines.” Rarely, he said, do they do so because of tax rates.
Conservative politicians might counter by noting that, while this may be true for people, businesses do relocate for those reasons, and they often bring employees with them.
So, don’t expect the tax-cutters, here and elsewhere, to stop. At the start of this year, according to the Tax Foundation, nine states enacted cuts to their individual income tax rates, with two of them shifting to flat taxes similar to Utah’s, while three states cut their corporate income tax rates. It could get crowded at the top of these studies in the future.
That’s not a bad thing. Regardless of whether it attracts more move-ins, people like to keep more of their own money, so long as basic services are funded.
We should wish Washington, in its current eagerness to fire workers and gut departments while still running up deficits, would become as conscious of the burdens it imposes on people as many states seem to be.
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