Making Sense of Utah’s Tax and Fee Burdens

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Utah’s tax burden is fairly high compared to other states. Fiscal Year 2008 state and local government finances data show Utah’s tax burden, including mandatory fees, ranks 16th highest in the country and fourth highest among western states. For a more complete understanding of Utah’s tax burden, however, it is important to also compare it to the need that exists in Utah for government services paid for through taxes and fees.

This report examines Utah’s tax burden using the U.S. Census Bureau’s latest comprehensive figures on state and local government finances. Utah Foundation includes both taxes and mandatory government fees in its calculation of the tax burden. The data show Utah’s tax burden remained fairly stable between 1993 and 2008, although the burden per $1,000 of personal income fell by about six dollars from 2007 to 2008. Utah’s mandatory fee burden increased over this period; rising from $10.30 per $1,000 of personal income in 1993 to $17.54 in 2007.

This report also estimates Utah’s demand for the state’s six-largest government-funded services, revealing that Utah’s demand for elementary, secondary, and higher education services is well above the national average. The state’s demand for public welfare services and hospitals and health-related services is below the national average. The demand for highway-related services and police protection/corrections is slightly below or roughly equal to the national average.

The fact that the largest portion of Utah’s state and local direct government expenditures is for education-related services—services Utah has the highest demand for in the country—puts Utah’s comparatively high tax burden in perspective. Utah’s burden for taxes and mandatory fees is 1.7% higher than the national average, while the state’s demand for education services is 20% higher than the national average. Because Utah’s demand for government-funded services, such as education, is higher than the national average, it is important to not only consider how the burden compares to other states, but how it compares to the need for government services within the state.

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