Utah Business Tax Climate
A recent report by the Tax Foundation puts Utah in the top 20 states in terms of friendly business tax climate. That is down from #15 in 2007. Perhaps the best news is that Utah ranks #5 in terms of the corporate tax rate index. More than any “corporate welfare” program or the investment boondogle that is the Utah Fund of Funds, a healthy tax climate will attract business. In addition an environmental policy that emphasizes conservation versus a strict “preservationist” or land lock up mentality will create an attractive environment for business and manufacturing to come to the state.
The one downside of the report is Utah’s ranking 30th as it pertains to personal income tax. This is after the record tax reductions over the past couple of years. In 2004, Utah was ranked 42nd, so we are seeing some improvement. Unless Utah keeps moving up in the personal income tax area, the great corporate environment we’ve created may be wasted, because who wants to work in an area with high property taxes and high personal income tax. Companies will have to offer higher salaries or find ways to locate employees elsewhere. I saw this happen firsthand in Ohio. The tax burden was so ridiculous that business looked for ways to locate facilities in unincorprated areas so employees could avoid city or county personal income taxes. So Utah needs to work on both ends, not just on corporate tax breaks.
