Aug 10

Study finds special interest tax deals eating up Coloradans’ TABOR refunds

Study finds special interest tax deals eating up Coloradans’ TABOR refunds

August 9, 2024 By Savana Kascak

 

DENVER–Governor Jared Polis has consistently said he wants to lower the Colorado income tax, even claiming that legislation passed earlier this year would deliver on that promise.  But new research shows that billions of dollars in special interest tax breaks also passed this year in all likelihood means broad-based income tax relief is off the table for the foreseeable future.

Earlier this year, Governor Polis signed Senate Bill 24-228, temporarily lowering the state income tax rate, on a sliding scale, as a refund mechanism when surplus revenue under the Taxpayer’s Bill of Rights (TABOR) is more than $300 million in a given fiscal year, with the maximum rate reduction (from 4.40% to 4.25%) kicking in at a $1.5 billion surplus.

TABOR is a constitutional amendment that requires, among other things, state revenues collected in excess of of a formula of population growth plus inflation be refunded back to taxpayers, unless voters consent to forgo those refunds at the ballot box.  An income tax rate reduction is but one potential refund mechanism available to the state. Continue reading

Aug 07

TABOR Media Statement About HD24-1311

MEDIA RELEASE

Contact:

            Penn Pfiffner

TABOR Committee Chairman

303-233-7731 or 303-747-7460

constecon@hotmail.com

 or info@TheTaborCommittee.com

August 8, 2024

Today the TABOR Committee relinquished hope that people would be able to vote on saving their TABOR refunds.  “There were simply not enough time and resources to collect the signatures in time for a citizen’s veto,” said Committee Director Rebecca Sopkin, who filed the ballot measure to repeal the 2024 law.

A new law establishes a new income redistribution program using about half of everyone’s TABOR refund.

TABOR was never meant to be an instrument to redistribute income.  Tax rates were to be adjusted downward to eliminate any permanent over-collections.  Refunds are legally a return of state sales taxes.    “The constitution specifically calls for returning over-collected taxes to those who pay the taxes.  You can’t tell me that someone making $15,000 a year bought $110,000 of taxable goods,” observed Committee chairman Penn Pfiffner.  The State does not impose sales taxes on purchase of housing, food or medicine.

 

The Committee explained that the income redistribution only happens if there is a TABOR refund and so why, if this program is so important to proponents, did legislators fail to place it under the general fund budget?

 

The measure, HD24-1311, diverts $684 million in the first year, using planned TABOR refunds to impose again the federal COVID program of subsidies to low-income families with children, but using new taxpayer funds at the state level.

The program will send money to recipients even beyond the taxes that the person pays Eligible people do not have to be taxpayers.  They do not have to be citizens!  They do not even have to reside in the state all year!

Legislators are ignoring a very important message by citizens in the landslide vote last fall against Proposition HH.  With a roar, they told the government to leave the TABOR rebates alone so that taxes over-collected by the state would be returned to the taxpayers.

Jul 30

EDITORIAL: Salute our state’s constitution this Colorado Day

EDITORIAL: Salute our state’s constitution this Colorado Day

  • The Gazette editorial board

On Thursday, the state of Colorado turns 148 — and Coloradans no doubt can think of many good reasons to celebrate.

Among them of course are the Centennial State’s unmatched natural wonders. There’s also the state’s exquisite climate; its vast, wide-open spaces, and its abundant resources — from oil and gas underground to the wind and sunshine all around — that heat our homes, power our automobiles and light the way.

One blessing that’s more directly connected to the advent of Colorado’s statehood itself is our founding charter — our state’s constitution — which shares the same birthday. Drafted in March of 1876 and approved by territorial voters on July 1 of the same year, the Colorado Constitution formally took effect Aug. 1, 1876, when Colorado was admitted to the union.

There’s good reason to celebrate the state’s constitution, as well, on Colorado Day.

Like any constitution, ours isn’t without foibles. At times it has left itself wide open to interpretation, and activist courts have been happy to oblige. Yet, on the balance, Colorado’s constitution has served its citizens pretty well — including by way of some well-timed and well-placed amendments to the document over the generations. Continue reading

Jul 25

HB1311.  New law plunders TABOR refunds.

HB1311.  New law plunders TABOR refunds.

During the legislative session just ended, legislators passed and the governor signed a new law that establishes a new income redistribution program.
Your expected TABOR rebate from the state government over-collecting taxes was reduced and got cut nearly in half.

The new law is known as House Bill 1311, which sponsors call the Family Affordability Tax Credit (FATC).

The measure diverts $684 million in the first year, using planned TABOR refunds to give subsidies to low-income families with children.
There are formulas for how households will be treated differently, depending on the age of the child and the amount of income earned by the parent.

How did the General Assembly get away with a costly new program that you did not get to vote on?
After all, the Taxpayer’s Bill of Rights requires that voters must approve the retention of taxes above the TABOR limits.
Proponents claim the scheme is a method to return the surplus.

The act creates a new refundable tax credit.  Refundable means that the State will rebate to the welfare recipient money above any taxes that person owes.

This is a clear violation, as TABOR is to rebate over-collected taxes to those who paid and should be proportional when identifiable.

Income taxes are clearly identifiable.
There is no reasonable explanation that the State cannot identify who paid how much income tax and how much of a TABOR rebate that taxpayer should get.

The new law, HB1311 says:

  • Eligible people are “residents.”
  • They do not have to be taxpayers.
  • They do not have to be citizens!
  • They do not even have to reside in the state all year!

The TABOR Committee explored how to overturn HB1311 on this fall’s ballot.
Is there enough interest and funding to reverse the new law?
Action must be taken immediately and the effort is costly.

Arguments against the HB1311 program:

  • Note that HB 1311 is in addition to the “Earned” Income Tax Credit bill and the Child Care Tax Credit, which also reduce our general TABOR rebates.
  • While subsidizing families is arguably a government goal, it is done properly through welfare programs.  In Colorado with TABOR in place, that would mean funding the program under the TABOR spending limits.  It would require prioritizing the welfare subsidies within the budget imposed by the citizens.  Instead, this bill establishes a new welfare program completely reliant on state TABOR surpluses.
  • TABOR was never meant to become an instrument to redistribute income.  The concept was that tax rates would be adjusted downward to eliminate any permanent over-collections.

If this program is so important to proponents, then why restrict it to TABOR refund years?

Legislators are ignoring a very important message by citizens in the landslide negative vote last fall against Proposition HH.
With a roar, they told the government to leave the TABOR rebates alone so that taxes over-collected by the state would be returned to the taxpayers.

A philosophic core of the Progressives, who control the current Colorado General Assembly, is the leveling of income.
This bill, HB1311, is a mechanism to redistribute income through the TABOR tax rebates.

We need to overturn this horrendous bill at the ballot box.

Will you join us in trying to do so and restore your TABOR surplus refunds?

#ColoradoRejectedPropHH
#ItsYourMoneyNotTheirs
#DontBeFooled
#VoteOnTaxesAndFees
#FeesAreTaxes
#TABOR
#FollowTheMoney
#FollowTheLaw
#ThankGodForTABOR

May 29

Americans in One State Could See Tax Refunds Significantly Drop

The Colorado Legislature is redistributing your TABOR surplus as they see fit instead of rightfully returning the surplus to you.
#ReplaceThemAllForNotFollowingVotersWishes
#TABOR
#ItsYourMoneyNotTheirs
#DontBeFooled
#KillHD24-1311
#HandsOffTABOR

Americans in One State Could See Tax Refunds Significantly Drop

Colorado residents can score an extra check this year worth up to $1,600 if they qualify for the TABOR refund, but the state program could see refunds drop if a new bill goes through.

Colorado Governor Jared Polis and several lawmakers have proposed SB24-228, which would cause a temporary income tax reduction and cuts the sales tax rate. The new bill would get rid of the automatic TABOR refund and instead offer the rebate only in certain years with high surpluses.

If the bill passes, the state will lower income tax rates based on the amount of money it collects, and when the surplus reaches $1.5 billion, the income tax rate would drop by 0.15 percent. So the more money the state takes in, the lower residents’ income tax rates will be.

Colorado Governor Jared Polis speaks at the opening day of Fan Expo at the Colorado Convention Center on June 30, 2023, in Denver. Polis proposed a new law that affects residents’ TABOR amounts over the… More THOMAS COOPER/GETTY IMAGES

The Taxpayer’s Bill of Rights (TABOR) refund currently provides $800 for single filers and $1,600 for couples filing jointly.

“TABOR is the Taxpayer Bill of Rights and provides a refund when the state collects more tax revenue than allowed under the statute,” Kevin Thompson, a finance expert and the founder/CEO of 9i Capital Group, told Newsweek. “This helps residents by giving money back to them when the state collects tax revenues over the stated amount based on the statute.”

To continue reading this TABOR article, click (HERE) to go to Newsweek.

May 23

2024 Colorado Legislative Session: TABOR Takings Tracker

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PDF OF FULL REPORT

Author: Erik Gamm and Chris Brown

TABOR Takings Tracker

Legislators placed Coloradans’ TABOR refunds squarely in their crosshairs during the 2024 legislative session, having passed over 100 bills that would slash the TABOR refund to a quarter of its projected size if signed into law. Amid a period of state revenue growth in unprecedented excess of the Referendum C spending cap and a state budget larger than $40 billion for the first time in history, the state’s legislative majority has seen fit to circumvent the standard refund mechanisms through a long list of proposed tax rate reductions, tax credits, and redistribution efforts. Since the last issue of this report five days before the end of session, five TABOR-impacting bills were defeated, four new ones were introduced, and several others were amended heavily.

By the end of the legislative session, lawmakers passed 101 bills that will affect TABOR refunds. Most of these redirect money out of refunds towards targeted tax reductions for specific groups, mainly families and low-income Coloradans. Through such measures, the state will diminish taxpayers’ agency to decide, whether by saving, investing, or donating to charity, how best to allocate money that they would normally be owed. Voters rejected Proposition HH, which proposed to take TABOR refunds in exchange for limited property tax relief, just last November.

  • 101 bills were passed during the 2024 legislative session that, if signed into law, will reduce projected TABOR refunds by a combined $2.8 billion (47%) of the $6 billion projected between FY24 and FY26.
    • These bills propose to reduce the TABOR refund by a combined $523 million in FY24, $1.06 billion in FY25, and $1.25 billion in FY26. The recent announcement that an additional $67 million in TABOR refunds is owed to taxpayers due to an accounting error is not reflected in this report.
    • The reduction in refunds over the next three years is similar in size to the FY23 TABOR refund. Of the $3.28 billion available, $3.1 billion was distributed as direct payments of $800 to each Colorado taxpayer. The remaining $180 million was diverted via an expansion of the Earned Income Tax Credit approved during the 2023 session.
    • The two most impactful bills from the 2024 session (see the list below) will reduce TABOR refunds by $1.8 billion, more than 42%, between FY25 and FY26. The rest of the bills would reduce refunds by a total of $391 million (9%) over that period.
    • Some major bills, like SB24-166, were lost in the final days of the session.
  • SB24-228, which is expected to be signed into law shortly, proposes to change the TABOR refund mechanism by lowering the state income tax rate according to the level of excess state revenue. When it comes into effect, Coloradans’ TABOR refunds will be partially replaced by income tax reductions.

The figure below shows projected TABOR refunds in the next three fiscal years and the amounts of those refunds that each bill would remove.

2024 legislation will reduce the current fiscal year’s TABOR refund to $1.3 billion, which is 71% of the latest projection.

2024 Colorado Legislative Session: TABOR Takings Tracker

Continue reading

May 23

EDITORIAL: Faux refunds preempt Colorado’s taxpayers

052024-dg-editorial-1

The Colorado State Capitol (Gazette file photo)
Our state government is required under Colorado’s constitution to refund excess tax revenue. Any year-to-year increases in collections above the rates of inflation and population growth combined must be returned to the public. Hence, taxpayers’ “TABOR refunds.”

When it comes to the actual process for returning the money, however, there’s a lot of wiggle room. Too much.

Exhibit A is a package of bills adopted near the end of the 2024 legislative session earlier this month. As we noted here then, the legislation hijacks Coloradans’ TABOR refunds, doling them out through a combination of temporary tax cuts and credits. It further complicates a refund mechanism that already was complicated enough thanks to previous legislative tinkering.

Continue reading

May 23

Colorado taxpayers to lose $2.8 billion in TABOR refunds due to legislature, study shows

Common Sense Institute says the state reduced just less than half of expected TABOR refunds to Colorado taxpayers between 2024 and 2026

Capitol Building in Downtown Denver Colorado Photo Credit: Boogich (iStock).
Photo Credit: Boogich (iStock).

The $2.8 billion loss is just less than half of the projected $6 billion in TABOR refunds for the next three years, CSI found in its report following the 2024 Colorado legislative session.

“Legislators focused intensely on TABOR refunds this session,” CSI Mike A. Leprino Fellow Lang Sias said in a statement.

“What started a few years ago,” he said, “has snowballed into what we saw play out during the 2024 session where more than 100 bills redirected TABOR refunds.”

TABOR refunds come from excess state revenue that is sent back to Colorado taxpayers in the next fiscal year.

Over the next three years, Colorado taxpayers will lose $2.8 million in TABOR refunds mostly due to tax cuts, and due to the cost of the bills impacting TABOR, according to CSI’s TABOR refund report.

TABOR refund reductions will increase over the next three years, according to CSI’s report.

Continue reading

May 14

Gaines: Getting back from the state what we’re owed under TABOR

Pretend that your employer accidentally overpaid you, say $20 extra a month for a couple years.  Neither of you notice until one day you get an email telling you about the mistake.  The mistake has been fixed and your pay will be $20 less going forward.  Also, you now owe your employer $240.  Not a pleasant thing to consider.
Fresh on the heels of Governor Polis signing the state budget, we got similar bad news.  Due to an accounting error there’s a $67 million “oops” in the budget.
The mistake stretches all the way back to the hurried 2020 legislative session and a bill rushed through for Polis’ signature.  SB20-215 created the Health Insurance Affordability Enterprise, another of those government-run “businesses” which attaches a fee to many health insurance policies (any policy regulated by the state’s division of insurance).
These fees go to Governor Polis’ pet reinsurance programs as well as subsidies for low-income residents, including, incidentally, those here illegally.  Like all enterprises, this revenue was not subject to the revenue limits the Taxpayer’s Bill of Rights (TABOR) puts on the government.
So far a pretty standard example of how our legislature likes to meet its priorities, not by the consent of those that foot the bill, but by taking without asking first.  The problem came in because someone, somewhere in the state government, screwed up.  I can’t quite seem to find out the exact details, but someone goofed.  Tax revenues from the state’s general fund were going to this enterprise, as they were supposed to by an earlier law and no one kept the money separate.
They should have been separate because the general fund dollars are decidedly not exempt from TABOR limits.  The state was keeping money above TABOR limits pretty much since the start of this enterprise, shorting us on money we are owed.  As I say above, the exact details of who knew and when are not too clear to me; I have seen different versions in different news stories.  Some say that no one on the legislature’s Joint Budget Committee knew until after the budget was signed, the legislators being kept in the dark while the state controller and the attorney general were trying to see if they did indeed have to return the money.
If you have seen headlines on this problem, you may or may not have noted a discrepancy in the dollar amounts.  Some articles say $67 million, some say $34.  Both are right, but the semantics are important.  The total owed is $67 million:  $33 million for this year and $34 million for the past couple years of overpayments.  If I return to my analogy from before, you could liken the $34 million to the $240 you’d owe your employer, the $33 million to the $20 loss on your current check, and the loss of that $20 per month in the future to the problem the state has in trying to figure out how to fund the enterprise fully going forward.
Going forward is pretty simple.  Perhaps not pleasant, but simple.  A bill is already working its way through the legislature to make sure that this problem doesn’t recur.  Working in descending order, the next problem is how to pay the $34 million overcharge from this year.  That one will likely get paid, at least in part, by not sending general fund revenue to the enterprise this year.
Lastly, the thorniest problem, the one that I think seems to be causing the most heartburn is how to pay taxpayers back the $33 million they’re owed from the last two years.  I had to laugh when I read up on this issue because some Democrats, the same ones that howled about the irresponsibility of using the state’s reserves to help temporarily drop property taxes in the last special session, are now perfectly okay with dipping into said reserves to pay taxpayers back.  Funny how quickly reckless financial irresponsibility isn’t reckless anymore when the political need is big enough.  Tapping reserves carries a couple problems, however.  First, the legislature must enable this to happen because this size of a hit puts us below the statutory minimum, and somehow, at some point in the future, that loss would need to be made up.
Another route open to our legislature would be to reduce spending.  They could simply not spend as much this session and put that money into refunds.  You know, kind of like when you have to forego some spending you wanted due to unexpected bills.
I marvel at this whole story.

Continue reading