Taxes & Cost of Government
The burden of government on people's property is perhaps no more direct than through the tax system. Government directly taxes the incomes, property, and economic activity of its populous in order to fund its operations. This metric looks at that burden through a variety of data points. We calculate the total cost to the population and community of the services or spending of the government. This can be calculated in many ways. We have chosen to look at it based on 5 different calculation methods. Each measure is a two-year average using tax and budget data from 2013-2014. Data comes from the Utah State Tax Commission, the Census Bureau, and the city financial statements filed with the Utah Auditor. Each measure uses a variation of data from a variety of sources and each is calculated in a slightly different way. The following are elements used in some or each of the measures.
- Total Revenue: All revenue to the city from exactions on the public of any type. This included all types of taxes like property and sales along with fines and fees. It does not include intergovernmental transfers. This figure is used to determine the total fiscal burden of city government on the people based on income sources the city utilizes.
- Total Assessed Value: Value of all taxable property in a municipality as reported by the Utah State Tax Commission for the certified tax rates (available at: taxrates.utah.gov). We used the grand total of real, personal, and centrally assessed value as reported in report 510.233b "List of Final Values." Tax years 2013-2014 are what yield revenues for budget expenditures in 2014-2015 (however, the values for those years are assessed in 2012-2013). We used the figures as reported for tax years 2013-2014.
- Estimated Sales Tax Base: Total value of taxable sales per year estimated by multiplying total sales tax revenue (per financial statements filed with the state auditor) by the sales tax rates in effect at the time.
- Other Tax Base or Total Personal Income: Total personal income of the city estimated by multiplying the total population by per capita income. Population figures were taken from the Census Bureau estimates of the American Community Survey. Income figures were calculated based on a combination of both census-reported income and IRS filings as reported by the USTC. Income figures were adjusted so as to compare cities based only on the income of residents living in incorporated areas.
- Total Economic Base: The total base of economic value or activity from which taxes are collected. This is the sum of the total assessed value, estimated sales tax base, and the other tax base (total personal income).
Measures of Cost of Government
- Cost of government per $10k of total tax base (9%): Total revenue is divided by the total economic base from which that revenue is raised. The total is multiplied by $10,000 and is a two-year average.
- Cost of government per $10k of total personal income (12%): Total revenue is divided by the "other" tax base. This is the total personal income of the city. The total is multiplied by $10,000 and is a two-year average. Because all taxes are ultimately paid by people from their income, this measure is among the most important and is weighted accordingly in our score.
- Cost of government per capita (5%): Total revenue is divided by the total population for the city and is a two-year average. All taxes are ultimately paid by people. For this reason, many tax studies look at the cost of government per capita. However, because our taxes are collected on a rate basis as a share of income or property value, this per capita measure is not as meaningful and is thus weighted less accordingly.
- Government consumption per $10k of total taxable economic base (12%): This measure looks at total government expenditures instead of revenue alone. This incorporates all government consumption and therefore measures some economic crowd-out effects as it does include revenue from business type activities. Unlike the other measures, this measure includes intergovernmental transfers and other revenue sources. The total expenses are then divided by the total economic base and multiplied by $10,000 and is a two-year average.
- Cost of non-sales/non-property revenue per $10k of total personal income (22%): This measure looks at the total revenue from all sources other than property tax and sales tax revenue. This includes fines and fees. This figure is then divided by the total personal income for the city. Because property tax rates and sales tax rates are determined in a more formal and transparent way, this measure is unique in that it measures the more hidden burdens of government.
- Property tax revenue per $10k of total assessed value (30%): This measure looks at the total revenue to the city from property tax collections and is divided by the total assessed value of property in the city. The total is multiplied by $10,000 and is a two-year average. Because this measure directly measures the financial burden of government on property specifically, it recieved the highest weighting.
- Sales tax revenue per $10k of total taxable sales (10%): This measure looks at the total revenue to the city from sales tax collections and is divided by the total value of all taxable sales in the city. The total is multiplied by $10,000 and is a two-year average.
Each city is different in that its revenue comes from these three main sources in different proportions. Some cities, like South Salt Lake, have lots of retail businesses and a large daytime population and recieve a much larger share of their revenue from sales tax. Other cities may rely more heavily on property tax revenue or on city fees as a revenue source. By measuring the cost of government in different ways, this metric captures each of these differences.
Each measure in this metric was individually normalized and weighted accordingly to create the final score which counted for 30% of the overall Private Property category score.
To see a specific city's laws for this metric, click on its name in the right column, then find the = Taxes & Cost of Government ?> row in the table below the Private Property category.