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Impact of tax changes on Utah family of four

The Utah Taxpayers Association has just released its analysis of the impact of recent tax changes on a Utah family of four of various incomes. Click here to read the analysis.

This analysis illustrates the impact of tax changes of the 2006 and 2007 legislative sessions, including the following:

- individual income tax reduction

- 3% reduction in state sales tax on food from 4.75% in 2006 to 2.75% in 2007 to 1.75% in 2008.

- 0.1% reduction in general state sales tax from 4.75% to 4.65%

- 0.6% reduction in "boutique" sales tax on food (ZAP, mass transit).

- 0.25% rails/roads sales tax increase in Salt Lake County (most Wasatch Front counties will eventually adopt the "third quarter" sales tax increase). Food is exempt from this tax.

- 0.05% increase in mass transit sales tax rate

(Note: the above listed "percent changes" are technically percentage point changes, but policy makers generally call them percent changes).

The basis for comparison is the new tax system that will be implemented in 2008 and the old system with 7% top marginal rate kicking in at $8,626 taxable income.

The analysis does not include the impact of business tax changes. While businesses pass on taxes and tax cuts to customers, employees, and shareholders, determining how these tax changes are passed on to families and households of various incomes is problematic.

Click here to read the report.

Mike Jerman
Andrew Stephenson