Give each Coloradan the same amount of tax refund

Although many people continue to struggle to make ends meet and the cost of living in Colorado continues to rise, Colorado’s economy is booming. On average, incomes go up, jobs come back – and, in turn, the state takes in more tax revenue than the state Constitution allows it to keep and save for a rainy day or invest. in the services needed by a growing state.

Claire Levy, left, and Don Marostica

Because of these constitutional provisions — also known as the Taxpayer Bill of Rights, or TABOR — the state is poised to pay back billions of dollars to Coloradans over the next few years. Although the Constitution ties the hands of the General Assembly when it comes to to hold onto those tax revenues, it gives legislators broad authority over how the money should be delivery.

While the numbers show a booming economy, the pandemic recovery has not been even. People earning higher incomes benefit the most from wage increases and job growth, while inflation squeezes people in low-wage jobs and middle-class families.

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Unfortunately, unless lawmakers act, the state is about to use an outdated, unnecessarily complicated and unfair mechanism to pay back the money that will exacerbate inequality. That’s because in addition to a small amount being refunded through property tax relief for seniors and disabled veterans, the bulk of the money will be distributed using what l is called the ‘six-tier sales tax rebate’.

To determine how much of the rebate each income group gets, state analysts reverse-engineer the rebate amounts using demographic information from 1999 to determine how the money should be refunded in 2022. Under Under current law, the wealthiest will get the biggest discounts and those for whom every dollar matters the most will get the smallest.

It does not mean anything. Every Colorado resident with taxable income pays the same rate of income tax. However, discounts are calculated on a tiered scale. In addition to being too complex, a tax refund should not be tied to a person’s income.

Unchanged this year, Colorado will refund billions of dollars to people who need tax relief the least. Wealthy people should not receive an outsized share of record tax rebates. Instead, lawmakers should focus on targeting any tax refunds to working families who earn low and moderate incomes.

Fortunately, there is a simple solution. Under a plan promoted by the Colorado Fiscal Institute and others, lawmakers would scrap the existing complex refund mechanism and simply give everyone identical refunds regardless of income level.

In addition to being simple, it’s fair. Unless lawmakers act, a millionaire will get nearly $2,000, while the average newbie teacher earning less than $40,000 will get just over $300.

If everyone received the same amounts, rebates for thousands of Colorado teachers, nurses and other workers would increase by more than 50%. It would give them a few hundred dollars more to better meet rising costs, and because families earning low and moderate incomes are more likely to spend that money in their local communities than people earning more high, it will be better for the state economy. too.

As former members of the Colorado Joint Budget Committee, we both know how important bipartisan support is on Capitol Hill when it comes to fiscal policy. This common-sense proposal should appeal to both sides of the aisle because both sides agree that the tax code should support working families, not just the wealthiest people and big corporations.

Whether Colorado will refund billions of dollars already collected is not up for debate. The question is whether the money will be targeted in a way that reflects the unequal economy of 2022, makes our tax code fairer for working families, and does it in the easiest and most understandable way possible. .


Claire Levy, of Boulder, and Don Marostica, of Loveland, are former state legislators and both were members of the Colorado General Assembly’s bipartisan Joint Budget Committee.


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