This report analyzes the effects of proposed property or sales tax increases for transit improvements in Salt Lake County. The report was commissioned by the Salt Lake Chamber to help it understand the impacts each tax would have on household and business taxpayers with additional analysis on the policy and political implications of each tax option.
The report does not endorse one tax over the other but provides analysis of the advantages and disadvantages of either option. It also estimates the tax burden that each option would impose on Salt Lake County households or businesses. Among its findings are:
A 1/4-cent sales tax increase in Salt Lake County would generate significantly more revenue than the property tax-funded bond proposal approved for this November’s ballot. The additional revenue could allow for earlier retirement of bonds or could be used for additional projects or services.
- Businesses would pay about 31% of the sales tax increase or 43% of the property tax increase.
- Households would pay 69% of the sales tax increase, or 57% of the property tax increase.
- The higher burdens on households result because household taxable consumption is much larger than business consumption and homeowners own much more property than businesses.
- A sales tax increase would grow with the economy, while the property tax rate would decline each year as property values rise. Either option has advantages – the property tax imposes a lower overall tax burden that declines over time, providing taxpayer benefits; while the sales tax growth would allow faster bond payoff, more projects, or additional transit services to be funded.
With a potential special legislative session looming on transit funding issues, this report is intended to provide details to help make an informed decision.
Read this report: