Utah Voters: Take the Tax Off of Social Security Benefits

AARP Utah released a survey today taken of Utah registered voters age 18+ to help understand where voters stand on state tax reform proposals now under consideration by the Utah State Legislature. The shift in consumer spending toward online goods and services that is occurring nationwide creates challenges for long-term planning, because Utah does not currently tax many services, and all state income tax revenue, by Utah constitutional law, is earmarked for public education.

Key findings include the following:

• Two-thirds (67%) of all registered voters in Utah want the state to maintain the constitutional requirement dedicating all state income revenue to public education, but they are somewhat divided about the funding going to only K-12 (40%) or to both K-12 and state colleges and universities (57%).

• Most (70%) Utah registered voters support eliminating the existing tax on Social Security benefits and another seven in ten (72%) would support (strongly/somewhat) keeping the existing tax on Social Security benefits but only if there is an offsetting tax credit for both existing and future retirees.

• Half (50%) of all voters in Utah would support a lower sales tax rate of 3.1 percent (down from the current 4.85 percent) and its application to consumer services not currently taxed in Utah. In fact, at least three in five voters would tolerate the state taxing elective medical services such as plastic surgery (67%), dry cleaning services (66%), lodging services like hotels or home/accommodation sharing (65%), and professional consulting services (60%). Services opposed by most voters to a new sales tax are medical insurance premiums (84%) and rent (79%).

Currently, Utah is one of only 13 states that still tax Social Security benefits; lower income retirees receive a small tax credit each year for the Social Security taxes they pay but this credit is being phased out for future retirees. Social Security is a lifeline for many Utahns; according to the Social Security Administration, the average Social Security benefit in Utah is just over $1400 a month, and 45% of unmarried persons nationwide rely on Social Security for 90% or more of their income. Utah voters’ views on this tax are reflected below:

Registered voters in Utah show great support for changing the current sales tax rates on certain products, namely “sin” taxes. The majority of voters support the state increasing the current tax rate on e-cigarettes and vaping devices (83%), tobacco (80%), and beer and alcohol (79%).

AARP engaged Alan Newman Research to conduct this survey of Utah registered voters ages 18+ in August, 2019. A full copy of the survey, including methodology, analyses, implications, and a summary can be found here or going online to www.aarp.org/UTTaxReform.