The Taxpayer’s Bill of Rights was sold to Colorado voters in 1992 as a tool for empowering taxpayers. But in the 13 years since, lawmakers – without voter approval – have eroded that authority by carving out tax breaks that give 17 special-interest groups first claim to any tax refunds.
In fact, special-interest groups would receive more money than the average taxpayer in four of the next five years if voters reject November’s ballot proposal to suspend refunds under the Taxpayer’s Bill of Rights.
Legislative estimates show that over the next five years, almost $2 billion – more than half of all refunds – would end up in the pockets of special interests.
The biggest winners: the state’s businesses. They top the list of special taxpayer groups with a $650 million tax break.
Other groups that get first dibs on the money include parents with child-care expenses, more affluent residents with capital-gains income and businesses that invest in certain types of programs or equipment.
After those special tax breaks are paid, anything left gets doled out to the rest of the state’s taxpayers.
That’s not the way it was supposed to be, says TABOR author Douglas Bruce.
“Here I give them flexibility, and they abuse it,” Bruce said of lawmakers’ decisions to create tax credits that send pet groups to the front of the line when it comes time to collect a TABOR refund.
Because of the economic downturn, Coloradans haven’t seen a TABOR refund since 2001. But refunds are expected to be due again this year. If Referendums C and D pass, refunds would be suspended for five years after this year.
Referendum C would let the state keep an estimated $3.7 billion more than it is allowed to under TABOR. Referendum D asks voters to authorize $2.1 billion in loans largely for transportation and school improvements.
The measure’s proponents use projections by the nonpartisan legislative council to estimate the suspension would cost the average taxpayer – someone who does not qualify for any of the tax breaks – a total of about $500 over those five years.
Opponents put the cost to taxpayers at a total of about $3,200 for a family of four, because that’s how much the family will pay in taxes. It does not matter, they argue, that not all of it will be refunded to them.
Coloradans saw their first TABOR refund in 1997 – five years after the amendment’s passage. Between 1997 and 2001, the state refunded $3.25 billion to taxpayers.
Lawmakers passed the first two tax credits in 1999 and the list grew to the current 17 by 2001 and includes breaks for charitable contributions, rural health care providers, pollution-control equipment and farmers.
With more tax breaks, the TABOR refund was distributed less proportionally. Even among those lucky enough to qualify for tax breaks, gaping payment disparities exist.
For instance, Coloradans’ most recent TABOR refund came in 2001 and averaged $206 without any tax breaks.
More than 200,000 low-income Coloradans qualified for an additional tax break averaging $156 that year.
Meanwhile, about 9,000 more affluent residents received an average $5,433 break on capital-gains taxes. A related capital gains tax credit kicked back an average of $4,600 to 6,000 people.
That same year, more than 81,000 businesses qualified for a credit toward the taxes they paid to local governments on personal property. Of the almost $100 million credited, the 10 largest companies pocketed $22.8 million. The top 100 companies collected $42.7 million.
Meanwhile, taxpayer Lee Gray, whose household didn’t qualify for a tax break, said he pocketed about $250.
Gray, a lawyer who lives in Centennial with his wife and two young daughters, has a household income of between $110,000 and $120,000 and is likely to give up about $675 over the next five years if Referendum C passes.
He said he doesn’t think he qualifies for special tax credits. He supports the measures.
“Frankly, with the way we’re growing, I think we’re screwed if we don’t do something for our infrastructure as far as roads and better schools,” he said.
Don Willson, a small-business owner from Parker and father of four, probably will see about $1,000 in refunds during the five years covered by Referendum C. Wilson opposes both measures because government is already too big and “the only way to keep government in check in this day and age is to reduce its revenue.”
Government, he said, should focus its energy where it excels. For instance, In-N-Out Burgers sells only sodas, milkshakes, burgers and fries.
“They should refocus their attention on a few things that they do real well, and that’s protecting us, building infrastructure like roads and … stick with education,” he said.
The tax credits, he said, don’t “sit well.”
“The special interests are the voices that are heard, and I don’t think that’s right.”
Staff writer Mark P. Couch contributed to this report.
Staff writer Chris Frates can be reached at 303-820-1633 or cfrates@denverpost.com.
