The state of Utah has one of the top tax structures for businesses in the country according to a new report from the national Tax Foundation based in Washington, D.C.
The Beehive State was ranked the 9th best state for its tax structure for businesses in the Tax Foundation’s 2017 State Business Tax Climate Index, which was released on Wednesday. The index does not measure tax burden (i.e. taxes paid) rather it examines and subsequently ranks how a state structures its taxes on businesses.
According to the Foundation, 39 states use the three-legged-stool approach to taxes by levying a property tax, sales tax and income tax. Utah is included in those 39 states. Most top ranking states in the index do not levy one of those major taxes. For Utah to be highly ranked while still charging all three of the major taxes shows that the state is intelligently crafting its tax code in order to ensure the state is on sound financial footing. This is accomplished by not placing a large burden on one specific type of tax.
“The evidence from this report shows that Utah is taking the proper steps to remain competitive in attracting and growing businesses and generating growth in the economy through its tax code,” said Billy Hesterman, vice president of the Utah Taxpayers Association. “However, Utah cannot rest on its laurels. The state did slip one spot in its ranking from previous years. To keep Utah the number one state for business we need to continue to look at ways to improve the state’s tax structure by continuing to find ways to broaden the base and lower the rate.”
The Tax Foundation index measures how each state handles taxation through the property tax, sales tax, individual income tax, corporate income tax and unemployment insurance tax. When looking at the tax structures for each tax, Utah scored in the top five in the corporate income tax and property tax. The worst rankings the state received were the sales tax, 17th, and the unemployment insurance tax, which came in at 22nd.
“We hope the state sees this as a progress report and not a final report card,” Hesterman said. “While it says the state is in good shape, there are still things to be done to further Utah’s economic success. We hope lawmakers will look to the Utah Taxpayers Association’s Utah 2.0 plan which calls for the state to eliminate sales taxes on business inputs and lower the corporate income tax.”