Tuesday, June 17, 2008

General Tax Structure in Utah

Utah has traditionally relied upon what is oftened referred to as a "three-legged stool." The legs consist of the property, sales and income taxes. In Utah, as in many other states, fees have sort of become the fourth stool, or atleast the book you use to make up for a decline in property taxes relative to the other legs of the stool.

The reasons for reliance upon these taxes are sort of two-fold. One, everyone pays into the kitty for government services. Sales tax is a tax on consumption, as is, in much the same way, fees imposed upon the "consumption" of government services. Income is a tax upon, income of course, while the property tax is upon ownership of taxable properties not exempted by Utah's Constitution. The property tax is a "constitutional tax, in that all exemptions from the tax must be articulated in the Constitution under Article XIII. Exemptions for sales tax are statutory, (and as a result, quite numerous), and only require bills passed by the legislature and signed by the Governor.

Utah's Income tax has relied as it's basis the federal income tax. Income is defined for the most part based upon federal statute. Utah does deviate from federal statute in that the personal exemption for dependents is different, and there is exemptions for 1/2 of the federal income tax you pay, etc. However, the same deductions you would get from your 1040 form Schedule A or from your standard deduction carries over to your state income tax.

In subsequent posts, I hope to atleast address certain issues relative to the state income tax and sales tax, as I've already touched upon the property tax. As the trailer from the Johny Carson show used to say, "more to come."

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