If we ever formalize the “Official Language” of Colorado, our dictionary ought to define “tax increase,” because it’s hard to figure out just what it means.
The definition problem first appeared, so far as I know, back when the metro area’s Scientific and Cultural Facilities District sales tax (1 cent on every $10) was up for renewal.
Douglas Bruce of El Paso County is the author of the Taxpayer’s Bill of Rights, an amendment to our state constitution which limits governmental spending and requires voter approval of tax increases.
Bruce took issue with how the cultural tax should be worded on the ballot. He said it should be called a “tax increase” because, if it were approved, then metro sales tax would be higher than if the measure were not renewed.
It didn’t seem quite like a “tax increase” to me, since the rate stayed the same. If you paid 50 cents for a Denver Post at the news rack on Monday, and then paid another 50 cents on Tuesday, that’s not a “price increase.” So if you paid the culture sales tax last week, and you pay it at the same rate this week, how is that a “tax increase”?
Such analysis can get tricky, though. If I buy a $30 pair of jeans instead of a $20 pair, I pay more sales tax, but is that a “tax increase”?
Now we face the complications of school finance in Colorado. The legislature approved, and the governor signed, a bill which would freeze school property tax rates in most Colorado school districts.
A tax-rate freeze could hardly be a tax increase, could it? The answer depends on definitions. Assume that the assessed valuation of your house was $100,000, and the school district got 40 mills – that is, $4 for every $1,000 of valuation. So the tax would be $400.
So if the value of your house stayed the same, so would the tax. But suppose rich people have invaded and driven up your property values. So now the house is assessed at $150,000 (or $200,000 or $400,000). At 40 mills on $150,000, your tax is $600. That’s an increase in what you pay, even if the rate is the same.
Suppose the school budget was the same and the district needed only $400 from you. To keep your tax the same, the rate would drop from 40 mills on a $100,000 house to 27 mills on a $150,000 house.
So a “tax rate freeze” is not the same as a “tax freeze.” If the rate stays the same on that imaginary house, the taxes rise as the house’s value rises.
But on the other hand, even Doug Bruce doesn’t call it a “tax increase” if I buy those $30 jeans and pay more sales tax than if I’d bought $20 jeans. Then again, it’s a lot easier to select different jeans than it is to sell a house and move to lower property taxes, so the element of choice is different. But the principle is the same.
The Republican spin machine has already revved up on the property-tax rate freeze enacted by statehouse Democrats, even though it’s essentially the same proposal many Republican legislators supported a couple of years ago. It was for the same end – stabilizing the finances for our public schools.
The Republicans didn’t call it a “tax increase” then. But now Rep. Rob Witwer of Golden says that “the measure is a property tax hike and an end-run around the [state] constitution” since no public vote is scheduled. And state GOP Chairman Dick Wadhams says he plans to use it as a campaign issue in 2008.
So please, somebody define “tax increase” for Coloradans. Is it an increase in rates, an increase in dollars being paid to government, a refusal to decrease tax rates, or something beyond the comprehension of mere mortals?
Ed Quillen of Salida (ed@cozine.com) is a former newspaper editor whose column appears Tuesday and Sunday.
