LEGISLATURE
A conservative advocacy group and a state senator sued Gov. Jared Polis and the head of Colorado’s tax agency Thursday, alleging that recent legislation requiring the continued taxing of overtime pay — in the face of federal changes — violates the state constitution.
The lawsuit, filed in Denver District Court, argues that House Bill 1296 violates the state’s Taxpayer’s Bill of Rights, or TABOR, which requires voter approval before the state can levy new taxes.
HB-1296, which Polis signed into law in May, requires the state to continue taxing overtime starting next year — and it was passed in anticipation of a provision in Congress’ tax law this month that temporarily will allow workers to deduct a large portion of overtime from their federal taxes.
Colorado’s law was drafted as federal debates about cutting taxes on overtime — a campaign promise by President Donald Trump — were developing. Now lawmakers are grappling with the potential for hundreds of millions of dollars in cuts to state funding resulting from the final tax bill.
The new lawsuit, which Democrats dismissed as a political stunt, was filed by Advance Colorado and Republican Sen. Barbara Kirkmeyer, as well as by a Fremont County commissioner, Kevin Grantham — a former Senate president — and two Coloradans who receive overtime pay.
Income declared on earners’ state tax return typically is influenced by what is on their federal tax forms. The lawsuit alleges that restarting the overtime taxation at the state level constitutes the creation of new revenue, which would require voter approval, and it asks a judge to invalidate the law.
The state legislation didn’t necessarily create a new tax, although it changed the collection mechanism to ensure that tax on overtime still was collected regardless of federal changes. Functionally, it continues a tax on overtime income that the federal government now allows to be deducted to a significant degree — up to $12,500 annually — for the next four years.
Michael Fields, the president of Advance Colorado, accused Democratic lawmakers of trying to sidestep TABOR and voter approval.





