Jul 16

Protecting Taxpayers with Supermajority Requirements

Protecting Taxpayers with Supermajority Requirements

Cartoon workingman reluctantly paying taxes. (Photo: AdobeStock/PPD/Adiano)

CARTOON WORKINGMAN RELUCTANTLY PAYING TAXES. (PHOTO: ADOBESTOCK/PPD/ADIANO)

The best budget rule in the United States is Colorado’s Taxpayer Bill of Rights. Known as TABOR, this provision in the state’s constitution says revenues can’t grow faster than population plus inflation. Any revenue greater than that amount must be returned to taxpayers.

Combined with the state’s requirement for a balanced budget, this means Colorado has a de facto spending cap (similar to what exists in Switzerland and Hong Kong).

The second-best budget rule is probably a requirement that tax increases can’t be imposed without a supermajority vote by the legislature.

The underlying theory is very simple. It won’t be easy for politicians to increase the burden of government spending if they can’t also raise taxes. Particularly since states generally have some form of rule requiring a balanced budget.

Basically a version of “Starve the Beast.”

Anyhow, according to the National Council of State Legislatures, 14 states have some type of supermajority requirements.

And more states are considering this reform.

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Apr 11

Study: Colorado has sixth lowest tax burden in U.S.

Study: Colorado has sixth lowest tax burden in U.S.

FILE - Denver, CO
Denver, Colorado

jackanerd | Shutterstock.com

Colorado’s state and local tax burden was the sixth lowest in the U.S. in fiscal 2016, according to a recent report produced Key Policy Data (KPD), a joint venture between Public Choice Analytics and Visigov.

The report relies on an income-based analysis dividing the state’s total tax collections by its private sector personal income. The national average using this methodology was an overall local and state tax burden of 14.3 percent of income; Colorado’s was 11.8.

KPD compared the burden of tax systems across states by measuring tax collections against the size of the economy. It defines this as the “total private sector share of personal income, which is personal income minus government compensation and personal current transfer receipts” such as Social Security, Medicare and Medicaid.

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