Local, state governments’ reliance on property tax revenues increases

By Sun Advocate

Since 2001, Utah’s state, county and local governments have significantly increased the public entities’ budgetary reliance on property tax revenues.
By comparison, the reliance on the revenues generated by income taxes have decreased during the last three years.
Reliance on sales taxes in Utah has remained stable.
Utah’s experience closely resembles the trend reported in states across the nation.
The shift is primarily due to economic forces rather than decisions reached by state and local policy makers, indicated the Utah Taxpayers Association.
To compensate for stagnant state income tax dollars, local school districts have been especially aggressive in raising property taxes, added the independent public policy organization.
Many state and national public policy experts consider property assessments to represent the best form of taxation.
The experts’ opinion is primarily due to the stability of the revenues generated by property taxes, pointed out the independent public policy organization.
Since property values typically do not change drastically from one year to the next, the assessments are inherently more stable than other forms of taxation.
Utah’s truth-in-taxation law increases the inherent stability through the certified rate mechanism, noted the association.
As valuations of existing property increase, the tax rates decrease. Conversely, the rates increase in the event property valuations drop.
Other revenue sources like income and corporate taxes are significantly more volatile, continued the independent public policy organization.
During economic expansions, income taxes stemming from capital gains and corporate dividends increase rapidly. However, during recessions, the sources of revenue in question decline rapidly.
Since capital gains and dividends are tied to profitability, corporate income taxes exhibit similar behavior.
Sales taxes are also volatile, indicated the association. As the economic outlook becomes more pessimistic, households and businesses reduce purchases. The reduction in purchases depress sales tax revenues.
Property assessments are frequently considered the most unpopular of all taxes for at least two reasons, noted the independent public policy organization.
•First, income tax hikes are tied to an increase in the ability to pay.
But hikes in property assessments are not linked to an improved ability to pay and seniors on fixed incomes are particularly susceptible to tax increases.
•Second, Carbon County residents receive a bill once a year for property assessments.
Since local citizens do not receive a single annual sales tax bill, they tend to ignore the financial burden in question.
In fact, most Utahns would be surprised to learn that they actually pay more in sales than property taxes, concluded the association.
the Utah Taxpayers Association. To compensate for stagnant state income tax dollars, school districts have been especially aggressive in raising property taxes.
Many policy experts consider property assessments to represent the best form of taxation, primarily due to the stability of collected revenues, pointed out the association. Since property values typically do not change drastically from year to year, the assessments are inherently more stable than other forms of taxation.
Utah’s truth-in-taxation law increases the inherent stability through the certified rate mechanism, noted the foundation. As valuations of existing property increase, tax rates decrease. Conversely, the rates increase in the event property valuations drop.
Other revenue sources like income and corporate taxes are significantly more volatile, continued the independent public policy organization. During economic expansions, income taxes due to capital gains and dividends increase rapidly. During recessions, the sources of revenue decline rapidly.
Since capital gains and dividends are tied to profitability, corporate income taxes exhibit similar behavior.
Sales taxes are also volatile, indicated the association. As the economic outlook becomes more pessimistic, households and businesses reduce purchases. The reductions in purchases depress sales tax revenues.
Property assessments are frequently considered the most unpopular of all taxes for at least two reasons, noted the independent public policy organization.
Income tax hikes are tied to an increase in the ability to pay. But property assessments are not and seniors on fixed incomes are particularly susceptible to tax increases.
Second, unlike sales taxes, Carbon County residents receive a bill once a year for property assessments Most Utahns would be surprised to learn that they pay more in sales than property taxes. But the lack of a single annual bill due at the end of November causes many citizens to ignore the burden they shoulder in paying sales taxes, concluded the association.