Something about a property tax “freeze” makes it seem more like a tax “increase” than the moratorium on tax refunds that voters approved with Referendum C in 2005.
The freeze is Gov. Bill Ritter’s attempt to get more money for education without raising the rate of property taxes that support schools.
Some Republicans, including several in the legislature, supported Referendum C. But now legislative Republicans seem unified in their opposition to the freeze. The heretics have returned to the fold.
Republicans tend to define “tax increase” overly broadly. Accepting the language of TABOR, you’re suffering a tax increase if you opt to buy a Cadillac Escalade instead of a Honda Civic. The logic: The Escalade costs much more, therefore you pay much more in taxes. It’s a tax increase because the state gets more sales tax revenue, even though the government has done nothing to change the tax rate or otherwise actively seek more revenue.
Republican supporters of Referendum C did not accept this distorted definition of “tax increase.” They even were willing to point out that the state had, in fact, actually reduced tax rates.
Now, however, all the GOP seems to be on board with the idea that a steady (“frozen”) tax rate equates to a tax “increase.” Why? Because property owners’ tax rate will not decline as it would have otherwise.
Property taxes increase as property values increase, even if the rate – the mill levy – remains constant. Thus the taxpayer, without conspicuously increasing consumption or income, is faced with a higher tax bill. Simply because the taxpayer’s home is worth more than it used to be, more property tax is due.
This inadvertent, passive paying of more money to government certainly is easier to sell, politically, as a “tax increase” than what Referendum C addressed, which was revenue increases caused simply by people earning more and spending more than they did before.
Any discussion of property tax is complicated by the 1982 Gallagher Amendment, which fixed residential property taxes at a certain percentage of total property tax collections across the state. As a result, residential taxes dipped while commercial property taxes increased.
When TABOR passed in 1992, it effectively ended the comparative rise of commercial property taxes. But residential property taxes continued to fall, relative to total revenues. The tax losses were absorbed by schools and other local government agencies that relied on property taxes.
Gallagher passed in 1982 with a 65.5 percent favorable vote – much larger than any other tax-reduction schemes. TABOR, for example, had only 53.7 percent approval. In 2003, when Gallagher’s critics tried to fix the imbalances, the corrective Amendment 32 was crushed. Only 22.4 percent of voters favored it.
The freeze will not go unchallenged. Republicans will go to court arguing that it requires a vote of the people. That’s disingenuous, to say the least, since legislative Republicans proposed a similar plan in 2004 without a popular vote.
And yet, going to the voters might be politically wise – even successful. Already, voters in 175 of the state’s 178 school districts have approved TABOR exemptions. And the tax increases would be comparatively small. A family living in a $300,000 home in Jefferson County, say, may not object to spending another $20 a year if it means better schools. And in some cases – mine included – rates would go down.
Republicans tend to overestimate citizens’ aversion to taxes. They tried to make it their trump card in 2006 election campaigns and mostly failed. Voters may not be as stingy as they think.
Fred Brown (punditfwb@aol.com), retired Capitol Bureau chief for The Denver Post, is also a political analyst for 9News.
