Just for fun, can you think of a tax dumber than a levy that costs the government more to administer than it collects in revenue?
How about a sales tax on aircraft sold in Colorado to buyers in other states — a tax that collects absolutely nothing because it guarantees that there will be no aircraft sold in Colorado to buyers in other states?
Unfortunately, Colorado has both of these dumb and dumber taxes. Happily, the House Finance Committee has approved a pair of bills to ease the burden of the business personal property tax on small businesses and to eliminate the silly aircraft “flyaway” tax altogether.
Why should the owner of a used clothing store have to pay a tax attorney $500 to calculate whether she owes $60 in personal property taxes on the $3,000 computer system she uses to keep track of her sales?
House Bill 1225 by Rep. Joe Rice, D-Littleton, will free some 30,600 small businesses from this burden by raising the exemption on that annoying levy, currently $2,500, to $7,000 over three years. When fully phased in, the change would cost the state $638,000 a year in lost revenue.
We’d go a bit further and a lot faster. We’ve heard county assessors argue that any taxable account under $10,000 costs more to administer than it’s worth. Thus, we’d raise the exemption in Rice’s bill to $10,000 immediately — figuring the modest loss of tax revenue would be more than offset by reduced accounting and auditing costs for small businesses and local governments alike.
The second bill, House Bill 1261 by Rep. Bernie Buescher, D-Grand Junction, will eliminate the sales tax charged on all aircraft manufactured in Colorado but sold to buyers in other states.
Repealing this tax will cost the state nothing — because its very existence ensures there are no aircraft manufactured in Colorado and sold to buyers based in other states.
Buescher’s bill actually makes the sales tax on aircraft the same as the long-standing policy on automobiles. If you live in Cheyenne and buy a car in Fort Collins, you don’t pay sales taxes or registration fees in Colorado. You pay whatever taxes are due in Cheyenne, where your car is registered. But that same Cheyenne buyer buying a $100,000 aircraft in Denver would be expected to pay about $8,000 in sales taxes for the privilege — plus whatever taxes are due in Wyoming. Since that buyer isn’t dumb, she’ll probably just have the seller fly the plane to Cheyenne and transfer the title there. That explains why this nonsensical tax produces absolutely no revenue for Colorado.
Repealing this zero-revenue tax will promote the manufacture and rebuilding of aircraft in Colorado.
We urge the legislature to approve both bills reforming these dumb and dumber taxes.
