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Gardner Policy Institute outlines revenue 'trade‑offs' and Utah tax volatility
Summary
The Gardner Policy Institute presented principles of taxation and data on revenue volatility to the Revenue and Taxation Interim Committee on June 18, highlighting trade‑offs among revenue sufficiency, efficiency, fairness and the benefits of a diversified tax portfolio.
Phil Dean, chief economist at the Gardner Policy Institute, briefed the Revenue and Taxation Interim Committee on June 18 on tax‑policy principles and the volatility of Utah's major revenue sources.
"Fundamentally, taxes exist to fund public services that you... at the state level select for the state," Dean said, framing revenue sufficiency as a primary constraint for lawmakers. He described trade‑offs among five principles: revenue sufficiency, efficiency, fairness, administration/compliance and accountability.
Using long‑run data, Dean contrasted low‑volatility bases such as wages and retirement income with highly volatile sources such as capital gains and business income. "Different revenue streams vary in their underlying economic volatility," he said, adding that property tax is relatively stable "because of the nature of property itself" and Utah's truth‑in‑taxation system.
The presentation showed that three taxes — state/local sales tax, individual and corporate income tax, and property tax — account for roughly 90% of state and local tax revenue in Utah. Dean and colleague Maddie Orritt emphasized diversification: taxing different economic "ways people interact" (income, consumption, and stock/property) spreads risk and improves predictability for budgeting.
The economists also summarized long‑term trends: individual income tax has shown the strongest growth but also significant volatility; corporate income tax had fast growth with substantial year‑to‑year swings; sales tax is less volatile than income tax but more so than property; motor fuel and registration revenues have declined in real per‑capita terms. Dean recommended that policymakers weigh trade‑offs — for example, taxing wages provides steadier revenue but shifts burden toward low‑ and middle‑income earners, while taxing capital gains may be fairer but much less predictable.
Committee members asked for more detailed data and the presenters said further publications and datasets are forthcoming; staff noted the information is intended to inform legislators as they consider tax‑portfolio changes, not to prescribe a specific policy mix.
