Editorial: Lawmakers propose tax cuts, credits in disappearing ink | Editorial

The ruling Democrats at the state Capitol may be the first in the party’s history to acknowledge that the Taxpayer Bill of Rights is, in fact, an indelible part of Colorado’s constitution. The process has been ongoing since voters enacted the amendment in 1992, but finally, the ruling party appears to be on board with it.

As long as they can hijack it, of course.

If “hijack” is too harsh a word to describe the temporary tax cuts and rebates touted by legislative Democrats and their party’s standard-bearer, Gov. Jared Polis, last week, it certainly applies to some parts of the complex legislation. part.

Most notably, the majority party intends to reallocate this year’s $2 billion TABOR surplus as it sees fit. It doesn’t matter what taxpayers think; never mind that they have the constitutional right to refund excess taxes collected by the state.

Of course, the money must be returned—and it’s mandated under TABOR, which requires the state to return revenue it collected in a given year above the rate of inflation and population growth. But there is wiggle room on how the money will be refunded.

Lawmakers are not content with giving it back to the taxpaying public at large, as before. Instead, they are proposing again — as they have done in recent years — to exercise leeway under the state constitution to create quasi-refunds in the form of tax credits. These points will be awarded to the group or event deemed most deserving.

The plan announced last week would transfer about $700 million of the pending surplus to low-income Coloradans through an expansion of the Earned Income Tax Credit and a new “family affordability” tax credit.

This is problematic on several fronts.

This is unfair to the vast majority of taxpayers who helped create the excess revenue in the first place. Many of them also have relatively limited financial ability to use the money in times of inflation.

This is arguably unfair even to the intended beneficiaries of the tax credit. In recession years, when the state collects little or no residual revenue, the tax credit disappears. That’s when families who qualify for it need it most.

This makes the tax credit a gesture of false sympathy. After all, if lawmakers really cared, wouldn’t they hard-wire these credits into the state’s annual operating budget — paid as a regular line item — insulating them from the economic cycle?

In fairness to the governor, Polis also insisted that income tax cuts were part of last week’s much-hyped deal. That reflects his longstanding public support for cutting income taxes, and the state favors tax cuts of all kinds regardless of party affiliation.

Understandably, outnumbered legislative Republicans have embraced the tax-cut portion of the plan. As it stands, the editing is commendable.

However, like the tax credit, the proposed income tax cuts depend first on the TABOR surplus. Worse, the tax cuts won’t take effect unless the surplus exceeds $300 million. The size of the cuts will vary depending on the amount by which the surplus exceeds that threshold in any given year. This year, the income tax rate will be reduced to 4.25% from the current 4.4%.

If Polis truly cared about reducing the tax burden on Colorado income earners, would he pressure his Democratic colleagues in the Legislature to make the budget cuts permanent?

There will still be a surplus in some years. In bad years when there is no surplus, perhaps the bureaucracy can tighten its belt — for a change — just as Colorado families have always done.

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