Local governments are not harmed by Truth-in-Taxation, an analysis by the Utah Taxpayers Association demonstrates. Opponents argue that local governments are harmed by Truth-in-Taxation because certified tax rate calculations do not include annual adjustments for inflation. However, local governments are able to recoup inflationary losses by going through the Truth-in-Taxation notification process, and the association's analysis shows that property tax revenues as a percent of personal income have been very stable over the past ten years.
In 1995, property tax revenues excluding vehicle fee-in-lieu equaled 2.45% of personal income and increased very slightly to 2.46% in 2005.
Property taxes, including vehicle fee-in-lieu, amounted to 2.76% of personal income in 1995 and decreased slightly 2.72% in 2005.
In fact, property tax burdens would have increased if the Legislature hadn't reduced the statewide basic levy twice in the 1990s beyond the amount mandated by Truth-in-Taxation and if counties (except for Millard, Emery, and Kane) hadn't reduced reduced property taxes in exchange for imposing a 0.25% sales tax. However, there is some dispute on this point. Some argue that legislative property tax reductions gave "cover" for cities, counties, and school districts to raise their property taxes so that the tax cuts were zeroed out by tax increases.
Either way, the evidence is clear that local government revenues have not been adversely impacted by Truth-in-Taxation.
We'll be posting more about Truth-in-Taxation (TNT) in the next couple of weeks, including
- What is a certified tax rate?
- If TNT causes rates to decrease as valuations increase, why am I paying more property taxes now than I was last year?
- Is TNT solely responsible for Utah's property taxes being lower than the national average while all other major taxes (individual income taxes, sales taxes, and gas taxes) are above the national average?
- Why was TNT implemented and who was responsible for its implementation?
- How stable are property tax revenues compared to income and sales tax revenues?
- What impact do the following have on certified tax rates: board of equalization adjustments, delinquencies, personal property depreciation, centrally assessed valuations, and voter-approved bonds?
The association will also be releasing its annual property tax report in the next couple of weeks. This report will have more detail about the impact of TNT on property tax revenues.