Bill would give tax break to the poor
DENVER — Low-income Coloradans would be first to get a state tax break when there are surplus revenues to hand out under a bill approved in a House committee Wednesday.
Though lawmakers agreed there isn’t likely to be a revenue surplus for many years, Democrats on the House Finance Committee said when it happens, the state’s poorest people should get the tax break first.
Republicans on the panel, however, said it comes at the expense of a reduction of the state’s income tax rate for everyone else.
“There’s a number of folks in my area … who work two and three jobs,” said Rep. Ellen Roberts of Durango, who was one of five Republicans on the 11-member panel to vote against HB1002. “A lot of those people say, ‘I’m struggling, too. When you create more programs that help folks at the bottom tier, I’m paying for those, and I have a real problem with that because I’m trying to make my own ends meet.’”
The measure alters a 2005 law that called for a temporary lowering of the state’s income tax rate from 4.63 percent to 4.5 percent in years when Colorado collects more revenue than allowed under the Taxpayer’s Bill of Rights.
That law was part of a deal Democrats made with Republicans to get support to put Referendum C on the ballot. That measure, which expires this year, called for a time-out of TABOR that allowed the state to retain surplus revenue for five years. It resulted in about $3.6 billion staying in government hands.
The bill, introduced by Fort Collins Democratic Rep. John Kefalas, alters that deal.
Instead of the reduction kicking in when surplus revenues reach a certain level, it would be delayed until the state’s Earned Income Tax Credit is refunded to Coloradans whose income is below 200 percent of the federal poverty level, which is about $42,000 a year for a family of four.
That credit amounts to about 10 percent of a similar one they also get from the federal government.
“This could speed up the day when low-wage working families that are playing by the rules might benefit from some additional money,” Kefalas said. “In my view, that is leveling the playing field. Addressing poverty in an effective way is good for business.”
The highest percentage of Coloradans who qualify for the credit reside in the San Luis Valley, and Mesa County ranks 10th statewide in shear numbers with more than 8,700, or 13.9 percent, of county residents getting the credit.