Single people, childless couples, retired people and middle- and upper-income groups now carry substantially more of Utah's individual income tax burden than they did two years ago.
At the same time, many low-income people and families with several children have been removed from the tax rolls altogether, the Utah Foundation said Monday.The effect of two years of tax law changes has been a large shifting of the tax load from some Utah taxpayers to others, reported the private, non-profit agency, which studies government and taxation issues.
The report gave no information on what percentage of the overall tax burden is carried by these various groups - just figures on percentage changes.
The combined effect of the 1986 federal income tax reform and Utah's own 1987 tax law changes was to raise the income tax of a single person earning $25,000 by $247, or 19 percent, while cutting the tax of a four-person family making the same amount by $78, or 7 percent.
Further state law changes in 1988 reduced the four-person, $25,000-income family's taxes by $198, or 20 percent, and provided a $122 one-time rebate. The report gave no corresponding figure for the effect on single people.
In fiscal 1986-87, state income taxes totaled $533 million, or 2.92 percent of the state's personal income, the report said.
That percentage was about 35 percent higher than the U.S. average and 66 percent higher than the Mountain States average. At that point, Utah ranked 10th nationally and first in the eight Mountain States in percentage of personal income going for state income taxes, the report said.
During the 1987-88 fiscal year, the effects of the federal tax reform and the 1987 state law changes were felt as total state income taxes rose to $608 million - 3.18 percent of personal income. The report gave no figures on how Utah ranked nationally or regionally at that point.
Changes made by the 1988 special session of the Legislature provided a 12.5 percent one-time rebate and a 5 percent permanent reduction in tax rates, as well as restoration of one-third of the federal income tax reduction that had been eliminated in 1987.
These changes brought total state income taxes to $531 million this year, or 2.78 percent of personal income, the report said. It listed no national or regional rankings for this percentage, but said Utah's ranking has declined somewhat.
"Contrary to some opinions, low-income taxpayers will receive a larger percent of permanent tax reduction from the 1988 tax changes than will high-income taxpayers," the report said. "For example, a typical family with a gross income of $15,000 will have its state taxes reduced by 40 percent, while a four-person family with a $50,000 income will realize a reduction of only 11 percent." The 40 percent cut for the poorer family will be $92, while the 11 percent for the wealthier family will be $321.
The additional one-time, 12.5 percent rebates will be $29 for the $15,000 family and $353 for the $50,000 family.
The report said the 1988 special session changes achieved most of the tax reductions intended by supporters of the income tax initiative that will be on November's ballot. If the tax rates prescribed by the initiative are applied to the state tax base before the 1988 special session, the net tax reduction is almost identical at most income levels to that provided for by the special session, the report observed.
However, if the tax initiative cuts are combined with those from the special session, taxes will end up even lower than the initiative sponsors intended, the report said. The tax for a four-person family earning $25,000 will be $708 if the initiative passes and $754 if it fails.