Category Archives: Taxes

May 18

TABOR repeal is off the table for 2020. Now it’s Initiative 271, a $2 billion tax hike

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TABOR repeal is off the table for 2020. Now it’s Initiative 271, a $2 billion tax hike targeting the wealthy

Vision 2020 Colorado, a coalition behind a tax system overhaul, tells The Sun it will move forward with a graduated income tax measure that will lower taxes for the vast majority

coalition pushing to overhaul Colorado’s tax system will not pursue a complete repeal of the Taxpayer’s Bill of Rights this year, opting instead for a ballot measure in November that would generate billions in new money with higher taxes on the wealthy.

The new initiative — which is expected to receive final legal approval Wednesday — is designed to create a more equitable tax system in Colorado by lowering the current 4.63% tax rate for households making less than $250,000 a year.

MORE: Colorado’s regressive tax system, and a proposed graduated income tax, explained

An estimated 95% of taxpayers who are below the threshold would qualify for the tax cut, which would take effect for 2021. For those who make more than $250,000, the additional earnings are taxed at a higher rate up to the maximum of 8.9% for annual taxable income over $1 million.

The organizations behind the ballot question, known collectively as Vision 2020 Colorado, expect the new graduated income tax to generate an estimated $2 billion a year in new money with at least half earmarked to increase teacher salaries and retention. The remainder would be spent at the discretion of state lawmakers.

“We know middle-income Coloradans are paying a greater share of the tax burden than the wealthy 5%, but our tax code isn’t just unfair, it’s inadequate,” said Scott Wasserman, president of the Bell Policy Center, a leading proponent of the measure. The tough decisions made by state lawmakers about how to spend the $30 billion annual budget, he added, are “a purely consequence of our state not having enough money.”

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May 15

Colorado’s State Budget Needs Cutting

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http://coloradosun.com/2020/05/15/jim-morrissey-colorado-delicate-budget-operation/?utm_source=The+Colorado+Sun&utm_campaign=9823376a7f-Sun-Up&utm_medium=email&utm_term=0_2e5f9a0f1b-9823376a7f-64925121&mc_cid=9823376a7f&mc_eid=85f697f874&fbclid=IwAR3W2tJN0HFHvaxLvobX36jYdk6PnN6ydFgy5NNYntH450s2O9MxXD3o3kc

 

May 13

Coronavirus may trigger the second-largest property tax cut in Colorado history, further crippling local budgets

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The reductions under Colorado’s Gallagher Amendment would slash total school district revenue by an estimated $491 million. Fire districts would also be hard hit.

At a moment when state and local governments are already drowning in red ink, Colorado’s constitution is now projected to trigger the second-largest residential property tax cut in modern history.

Under forecasts presented Tuesday, Colorado lawmakers could be asked to cut residential property taxes by nearly 18% in 2021 to comply with a tax-limiting constitutional provision known as the Gallagher Amendment.

For homeowners, it would mean permanent financial relief at a time of rising unemployment and deep economic uncertainty. But if the cut goes through as projected, it would have cascading effects at nearly every level of government in the state, gashing the budgets of property-tax reliant fire districts, county governments and schools.

The reductions would cut total school district revenue by an estimated $491 million. About half of that gap will impact the state budget, which is constitutionally required to backfill certain school funding shortfalls, even as it faces a fiscal catastrophe of its own as sales and income tax revenue plummet. In one fell swoop, it could wipe out all the recent gains the state had made in erasing its unfunded debt to schools, formerly known as the negative factor. At the county level, statewide revenue could drop by $204 million.

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May 08

TABOR: GOOD MEDICINE OR BAD?

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Constraints will help Colorado governments weather downturn

 

Shelby Meyer passes by The Irish Rover, one of many restaurants and bars now shuttered along South Broadway in Denver on April 14. The coronavirus has caused many businesses to shut their doors during the coronavirus pandemic. Helen H. Richardson, The Denver Post

By Peg Brady
Guest Commentary

Peg Brady is a retired software analyst and designer. She has served on the TABOR Foundation Board of Directors for more than a decade.

The Denver Broncos and Food Bank of the Rockies hosted a mobile pantry at Empower Field at Mile High on April 27 to help people in need during the pandemic. RJ Sangosti, The Denver Post

The Taxpayer’s Bill of Rights (TABOR) has provided welcome stability to Coloradans as we all deal with the coronavirus pandemic. This provision of our state constitution allows all governments throughout Colorado an automatic but reasonable annual budget increase. The limits keep governments from growing too fast.

Therefore, when the economy gets into trouble, Colorado state and local governments have a more firm base for their spending and do not need to cut as drastically as other states. Government programs are more sound, strong and sustainable than if they had grown as fast as ambitious politicians often wanted. TABOR helps us to confront the current crisis.

Moreover, just when families and businesses are struggling, the Taxpayer’s Bill of Rights has led to timely tax relief. The state tax system has evolved so that, when times are good, it over-collects tax revenue. Last year, Colorado over-collected $428 million. TABOR mandates that the state rebates to you excess revenue collected during a fiscal year. So, the 2019 tax rate has been reduced from the usual 4.63% to 4.5% — a 0.13% drop.

You won’t receive a tax refund check; instead, the legislature reduced the income tax rate. Because the rebate is being accomplished through the lower tax rate, you may not recognize how much money you saved. Still, because the state will not incur the cost of issuing and mailing checks, we save that expense as well.

To continue reading this TABOR article, please click (HERE):

May 02

Paid family leave ballot measures move forward, with Democratic lawmakers in support

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paid family leave
State Sen. Angela Williams, D-Denver, speaks at a statehouse rally for a Colorado paid family leave program on April 9, 2019. Photo by Joey Bunch/Colorado Politics

The four sponsors of a Democratic-led proposal at the state Capitol have abandoned their legislative proposal and are now endorsing the three ballot measures proposed by Colorado Families First. According to state Rep. Matt Gray of Broomfield, they don’t have a preference and will endorse whatever the ballot proponents put in front of voters.

The four lawmakers talked to reporters Friday about the reasons for letting go of their five-year effort to put a paid family and medical leave program into state law and why they’re backing the ballot measures.

The court orders on ballot initiatives 247 and 248 dealt with a challenge by Kelly Brough, president and CEO of the Denver Metro Chamber of Commerce, which claimed the programs proposed under the ballot measures were a tax and hence violated the provisions of the Taxpayer’s Bill of Rights, which require voter approval for any tax increase. The language of all three ballot measures do not reference TABOR requirements.

 

Apr 27

Colorado lawmakers are looking at how to close a $3 billion budget shortfall. Here’s the roadmap.

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The Joint Budget Committee will begin reviewing recommendations for spending cuts this week to rewrite the $30 billion state budget

The impact of the coronavirus pandemic on the $30 billion-plus state budget begins to take shape this week as lawmakers consider massive spending cuts.

How much tax revenue Colorado will lose to the paralyzed economy remains uncertain, but the governor’s budget office is projecting $3 billion in lost revenue for the current fiscal year and the next.

The General Assembly’s budget writers on Monday will start reviewing recommendations from legislative analysts for potential spending cuts across all government agencies. The documents are expected to include scenarios for slashing budgets as much as 20% and force legislators to make hard choices that will impact most Colorado families, according to drafts reviewed by The Colorado Sun.

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Apr 08

Learning from Colorado’s Success, Alaska (and Every Other State) Should Adopt a TABOR-Style Spending Cap

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April 7, 2020 by Dan Mitchell

As explained in this short video, a spending cap limits how fast a government’s budget can grow each year.

That’s a very sensible approach, sort of like having a speed limit in a school zone, and even left-leaning international bureaucracies have concluded it’s the best fiscal rule.

That being said, not all spending caps are created equal. A fiscal rule that allows continuous increases in the burden of government spending is akin to an excessive speed limit on the road in front of an elementary school.

At a minimum, a spending cap should keep the spending burden constant (relative to the economy’s productive sector). Even better, a spending cap should fulfill the Golden Rule of fiscal policy by slowly but surely reducing the size of government.

Let’s learn from a real-world example.

Ben Wilterdink, a Visiting Fellow with the Alaska Policy Forum, explains for readers of the Peninsula Clarion that the state has a spending cap, but one that is set too high.

Alaska is in the midst of a perfect fiscal storm. …Even before the present crisis, our state faced large budget deficits and tough decisions about how to make ends meet. …That’s why adopting a functional limit on the growth in state spending is essential for long-term economic success. …a functional limit in the growth of state spending decreases the temptation to dramatically increase spending when economic times are good, creating new budget expectations that are difficult to maintain during inevitable economic downturns… Technically, Alaska already has a constitutional spending cap in place, but the formula used renders it basically meaningless. …While Alaskans can’t retroactively adopt a meaningful spending limit, we can ensure that those economic benefits are captured going forward.

So why is a spending cap now an important issue?

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

Apr 07

“Truth and reason in ballot language!”

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“Truth and reason in ballot language!”
April, 2020

The Taxpayer’s Bill of Rights includes good government provisions that improve election procedures.

There was a time when Colorado elected officials could push for passage of a bond, or for new taxes, but bury the cost very deep into the explanation on the ballot, in hopes that many voters might not notice the magnitude of the tax.

The ballot language would promise all kinds of wonderful outcomes.  Not only would the new revenues for the government solve the problem in perpetuity, but it would bring world peace and even make the voter more handsome!  Then, near the end in the midst of a lot of other promises, would come the information that the cost to the taxpayer would be very, very high.

The Taxpayer’s Bill of Rights stopped that sort of game playing.  Now, the government must put the cost right up front.  It has no option but to state how much the new tax will weigh annually on the taxpayer.  For a new bond, the ballot measure must state at the very beginning how much the total new debt will be and what that means for the total repayment cost.  Only then may the government (“district”) present its reasons for the new taxes.

Another game that the Taxpayer’s Bill of Rights anticipated and which it explicitly prohibits is a government underestimating a revenue number.  If the new taxes exceed the estimate, the entirety of the overage must be refunded the next year and the rate adjusted downward.

Colorado constitution (Article X, Section 20), paragraph 3(c) states:  “Ballot titles shall begin, ‘SHALL (DISTRICT) TAXES BE INCREASED ____ ANNUALLY?’  (or)  ‘SHALL (DISTRICT) DEBT BE INCREASED (principal amount) WITH A REPAYMENT COST OF (maximum..)’.”  Earlier in the same paragraph is the requirement that “if a tax increase exceeds any estimate… for the same fiscal year, the tax increase is thereafter reduced up to 100% in proportion to the …excess, and the combined excess revenue refunded….”

The paragraph was carefully crafted as a good government improvement, with TABOR protecting the taxpayer in ways beyond just voting on tax rates.