Category Archives: Editorial

Mar 18

New Real Estate Transfer Taxes Are Not Allowed

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New Real Estate Transfer Taxes Are Not Allowed

The Taxpayer’s Bill of Rights includes provisions beyond the required citizen vote on new or higher taxes.

Real estate purchases have much higher values than purchases of consumables.  Purchasers of consumables such as household goods and of durable goods such as appliances and cars must pay a sales tax.  Governments have looked hungrily at real estate purchases as possible sources of taxation, salivating over taking a portion of the value each time there is a sale.

That’s a bad idea.

Our Colorado Taxpayer’s Bill of Rights is comprehensive enough to prevent any government (“district”) from even proposing to add this type of tax.  Because TABOR is written into the state constitution, any government would first have to initiate a statewide vote to overturn this provision before a new tax scheme could even be considered.

There are just a few existing real estate transfer taxes, which were “grandfathered in” upon the 1992 passage of TABOR.  There is a trivially small (.0001) statewide tax, mislabeled a “document fee,” for each sale.  It was initially imposed just to provide an indication of sale price.  There are 12 municipalities that have long-standing transfer taxes, all in the mountains and on the Western Slope.  In addition to a prohibition of new transfer taxes, no rate increase is allowed for any existing transfer tax.  For more detailed information, follow this link: http://thetaborfoundation.org/colorado-real-estate-transfer-taxes/

Colorado constitution (Article X, Section 20), paragraph 8(a) states:  “New or increased transfer tax rates on real property are prohibited.”

The provision was included within the Taxpayer’s Bill of Rights as an additional protection for citizens.  A specific real estate sale might go forward in Colorado, when it otherwise might not quite reach the buyer’s threshold with the additional burden of an onerous transfer tax.

New Real Estate Transfer Taxes Are Not Allowed

Mar 18

Colorado Real Estate Transfer Taxes

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Colorado real estate transfer taxes

  1. State Documentary “Fee” (real estate transfer tax)

Upon the transfer (conveyance) of real property, a state statute gives all Colorado counties the power to collect a real estate transfer tax.  The authorization is found in Colorado Revised Statute 39-13-101 et seq.

Each county assessor is responsible for determining the actual value of any property.  The purpose of this real estate transfer tax is stated in the controlling statute’s legislative declaration as helping to establish what that market value is.  To do so, the assessor’s office needs to maintain a continuing record of the total price paid by purchasers.

The tax is calculated at one penny for every $100 of the purchase price (.01 percent[1]).  As an example, a house selling for $450,000 would see imposed a transfer tax of $45.  Values of real estate under $500 are excluded.

(An additional charge to cover the cost of processing the recorded document may be added to the tax so that the total “doc fee” shown on a closing form is likely higher than the tax.)

The tax is imposed upon transfer of all residential, commercial or other real property.  There are a few exceptions, the primary one being that no government (federal, state or local) must pay the tax, although it must show the purchase price on the recoded document.  Another important exception is the transfer of inherited property.

The law directs the tax be collected when the real estate transfer is to be recorded at the county’s clerk & recorder’s office.  The tax is accepted by the clerk’s office and deposited by the county treasurer to be used as general fund revenue for the county.

The law creating this tax was passed in 1963.  It has not been modified since.

 

  1. Local transfer taxes

There are 12 different towns in the mountains / Western Slope that impose real estate transfer taxes.  These were extant at the passage of the Taxpayer’s Bill of Rights in 1992 and so were “grandfathered in.”  The towns with the tax are shown in the accompanying table.

The constitutional provision created a statewide prohibition on the creation of new transfer taxes or the increase of existing transfer taxes

Towns with authority to impose a real estate transfer tax

 

Town Percentage of purchase price
Aspen 1.5  **
Avon 2.0
Breckenridge 1.0
Crested Butte 3.0
Frisco 1.0
Gypsum 1.0
Minturn 1.0
Ophir 4.0
Snowmass Village 1.0
Telluride 3.0
Vail 1.0
Winter Park 1.0

 

There was no state law governing the adoption of local transfer taxes.  All towns and cities on the list are home rule municipalities and they adopted their real estate transfer taxes pursuant to their constitutional authority under Article XX to do so as a matter of local concern.  This explains why only municipalities, not counties, have legacy transfer taxes that predate the prohibition created in the Taxpayer’s Bill of Rights.

** Actually, two separate taxes totaling 1.5%: Wheeler Opera House RETT 0.5%; Housing RETT 1.0%, and the first $100K is deducted prior to applying the HRETT

This synopsis was written by Penn R. Pfiffner in February 2021.  The author wishes to recognize the assistance of the Colorado Municipal League, which supplied the rates in the table and added language about home rule.

[1] See 39-13-102 paragraph 2(b)

Mar 16

Denver, Colorado Sales Taxes Increased Without Voter Consent

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Denver’s 2021 budget reveals that the city expects to collect $14 million in new sales tax revenues this year by taking advantage of a 2018 United States Supreme Court ruling for the first time. The State of Colorado began collecting new sales tax revenues under the same scheme in 2019.

These tax increases have come without voter consent, raising the question of whether sales tax rates should be lowered to offset the increases.

Key Takeaways

  • A 2018 U.S. Supreme Court ruling allows states and local governments to mandate that out-of-state retailers collect sales taxes from residents when selling online.
  • Denver and the State of Colorado have both created a substantial tax windfalls for themselves after promulgating new tax rules to take advantage of the ruling.
  • The state brought in $80 million in new sales tax revenue in FY 2019-20 as a result of the new rules. Denver projects a $14 million increase in sales tax revenue this year as a result of its changes.
  • Both Denver and the state skirted TABOR. The burden of the new taxes falls on residents, but the changes did not appear on the ballot for voter approval.
  • The new rules effected a tax revenue increase by expanding the sales tax base. Denver should consider offsetting this base increase by decreasing its sales tax rate.

To continue reading this story, please click (HERE):

Mar 12

Colorado’s Competitiveness: The Challenge of Economic Recovery Under More than $1.8 Billion in New Regulations, Taxes and Fees

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Prior to 2020 and the global economic and cultural upheaval caused by the COVID-19 pandemic, Colorado stood out for having strong economic growth and offering a desirable lifestyle. Coloradans had created the #1 state economy and enjoyed competitive advantages in attracting business growth and an educated workforce. In fact, in late 2019, US News World Report ranked Colorado’s business climate as one of the best in the nation.

However, after two periods of negative economic shocks in 2020, in both late spring and through the holidays, the state of business in Colorado remains under duress.

  • There were 150,000 fewer jobs in Colorado in December 2020 relative to the start of the years, representing a 5.4% cut.[i] While the statewide reduction is significant, it masks the disproportionate impacts across industries, as the leisure and hospitality industry was down 90,900 jobs by end of 2020, whereas professional and business services was up 7,100 jobs.[ii]
  • State taxable sales were down $8.9B, or -1.35%, in 2020 relative to 2019.[iii] Small business suffered, especially. As of February 10th, small business revenue was down 29.5% from January 2020 levels.[iv]
  • Colorado’s unemployment rate increased by the 2nd-most among all states, from 2.5% to 8.5%. The Colorado state unemployment ranking went from near first (4th) to almost last (48th).[v]

To continue reading this story, please click (HERE):

Mar 12

Get ready, America, Democrats think tax hikes are the answer to everything: Grover Norquist

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Every issue is an excuse to expand the size and scope of government and implement trillions in new taxes


 

Americans for Tax Reform President Grover Norquist warns the White House is ‘heading in the wrong direction’ with tax increases to make up for economic losses during the coronavirus pandemic.

If your only tool is a hammer, everything looks like a nail.

For Democrats today, the solution for every new issue is another tax increase. Name the “problem” and their “solution” is a higher tax on American families and businesses.

Every issue is an excuse to expand the size and scope of government and implement trillions in new taxes.

Even in the recent $1.9 trillion COVID “relief” spending spree legislation, Democrats put in a proviso that they believe will stop any tax reduction by Republican-led state governments for the next four years: If a state cuts taxes the Biden administration will threaten to sue to get their “bailout money” back.

To continue reading this story, please click (HERE):

Feb 15

TABOR And Taxes Have A Big Impact On Seniors In Colorado.

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TABOR is a friend to Colorado seniors

TABOR and taxes have a big impact on seniors in Colorado. TABOR is one of the best friends to seniors in Colorado because it limits the growth of government spending (unless approved by Colorado voters) which, in turn, reduces the need for more taxation. In addition, there are other laws that benefit Colorado taxpayers 55 and older who get a $20,000 retirement income exclusion from state taxes, and the exclusion reaches $24,000 when they reach 65. Seniors may qualify for this exemption of up to 50% of the first $200,000 of property value if they’ve lived in the same house for 10 years. In the November 2000 election, Colorado voters passed a Property Tax Exemption for seniors, known as Referendum A.  It is called the Homestead Exemption Act.

Conversely, a big downside for retirees is that Colorado’s sales taxes (which have a local component) are on the high side and can exceed 11% in some parts of the state. Seniors need to be vigilant about local sales tax increase proposals and local property tax increase proposals that are relentless in requesting more money. Local governments and special districts frequently attempt to elude TABOR restrictions by de-Brucing. As a result, local government tax growth often exceeds the state tax growth rate. Colorado taxpayers have rejected over 20 statewide tax increases since the TABOR amendment to the Colorado Constitution was approved by the voters in 1992. Seniors should oppose de-Brucing efforts at the local level to preserve the TABOR provisions.

Income Tax Range

Excepting the plains, the only thing that is flat in Colorado is the income tax rate. Colorado became a flat tax state in 1987 and has a flat income tax rate of 4.55% (the approval of Proposition 116, which appeared on the November 2020 ballot, reduced the rate from 4.63% to 4.55%). TABOR limits how much its revenue can grow from year-to-year by lowering the tax rate if revenue growth is too high. For example, in 2019, this resulted in a rate reduction to 4.5%. Colorado is only one of nine states in the US with a flat income tax. The others are Illinois, Indiana, Kentucky, Massachusetts, Michigan, North Carolina, Pennsylvania, and Utah. Only Indiana, Michigan, and Pennsylvania have a lower flat tax than Colorado. However, none of these states have a taxpayer’s bill of rights (TABOR) like Colorado does.

Denver and a few other cities in Colorado also impose a monthly payroll tax.

Taxation of Social Security Benefits
Up to $24,000 of Social Security benefits taxed by the federal government, along with other retirement income, can be excluded for Colorado income tax purposes ($20,000 for taxpayers 55 to 64 years old). The exclusion is capped at $20,000 or $24,000 (dependent upon age) regardless of what retirement income is applied. In other words, if a taxpayer has Social Security income, IRA income, and pension income, the cap limits restrict the total exclusion to $20,000/$24,000.

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Feb 09

Mallory: Beware end-run around voters on gas tax hike

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 By Jesse Mallory

Now, on ly a little over two months later, those politicians are cooking up a new plan to create an end run around TABOR that would cost the state’s drivers millions.

The lack of respect for the people who elected them is breathtaking.

Proposals for what supporters are calling a “gas fee” — it’s an increase in the gas tax, don’t be fooled — would be a blatant violation of TABOR, and particularly insulting in light of the expansion of taxpayer protections approved in November and votes to reject two other road-funding proposals in 2018.


The message this sends to every Coloradan who voted to strengthen TABOR and to oppose the 2018 initiatives is that the politicians in Denver don’t seem to care what you say, no matter how often you say it. So we’ll just have to say it again, even louder.for what supporters are calling a “gas fee” — it’s an increase in the gas tax, don’t be fooled — would be a blatant violation of TABOR, and particularly insulting in light of the expansion of taxpayer protections approved in November and votes to reject two other road-funding proposals in 2018.

If the message sent by politicians is “we don’t care what you think,” our message to them has been and continues to be, “stop wasting our money, set priorities, and make better use of the money we are already sending you.”

This new fee — whose cost has yet to be determined — would be in addition to the state’s 22-cents per gallon gas tax (which is in addition to the federal 18.4 cents per gallon tax).

To continue reading this story, please click (HERE):

 

Jan 24

Opinion: Politicians’ challenge to Colorado’s TABOR is without merit

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For almost three decades, TABOR has been a godsend for Colorado taxpayers.

2:55 AM MST on Jan 24, 2021

Colorado’s Taxpayer’s Bill of Rights is under attack once again, this time by the very politicians whose actions TABOR is intended to check.

A lawsuit filed by state legislators and some local elected officials has been wending its way through the federal courts since 2011. They seek to overturn the voter-enacted TABOR amendment to the Colorado constitution, which requires voter approval before state and local legislative bodies can impose or raise taxes.

The lawmakers’ case rests on the dubious idea that by denying legislators a free hand on matters of taxing and spending, TABOR denies Coloradans a republican form of government, in violation of the U.S. Constitution.

It’s a specious, self-serving argument that ignores more than a century of case law and practical political experience with voter initiatives and referendums, in Colorado and elsewhere.

The case will now be heard by the entire U.S. Court of Appeals for the 10th Circuit, although it seems likely that the U.S. Supreme Court will eventually get the final word.

It’s a complicated case involving questions of standing — who has the right to bring a case to court — and whether constitutional guarantees of a republican form of government include the actions of political subdivisions such as school boards.

To continue reading this story, please click (HERE):

Jan 19

Taxation Wisdom From The Ages

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Taxation wisdom from the ages

  • Taxation without representation is tyranny.”…Founding Father James Otis
  • “The collection of taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public welfare, is only a species of legalized larceny.”…President Calvin Coolidge
  • “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents”… President James Madison
  • “There is no art which one government sooner learns of another than that of draining money from the pockets of the people.”…Economist Adam Smith
  • “Congress can raise taxes because it can persuade a sizable fraction of the populace that somebody else will pay.”…Economist Milton Friedman
  • “One thing is clear: The Founding Fathers never intended a nation where citizens would pay nearly half of everything they earn to the government.”…Representative Ron Paul

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Dec 30

Caldara: Putting your money where your causes are

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 By Jon Caldara

Americans give more of their hard-earned money to charitable causes than any people on the globe.

According to the Giving Institute, Americans give more than $1 billion a day to charities: a total of $410 billion in 2017.

And very little comes from the ultra-wealthy, big foundations, or large companies looking for good press. According to the Philanthropy Roundtable, in 2014 only 14% came from foundation grants, and just 5% from corporations. The rest, 81%, came from individuals like you.

Per capita, we voluntarily donate about seven times as much as continental Europeans. In Europe people see little reason to give more of their own money when so much is being forcibly taken by taxes and redistributed by the state for “what charity used to do.”

To continue reading this story with Jon mentioning The TABOR Foundation, please click (HERE):