The debate in Washington, D.C., over the expiring federal income tax cuts appears to be on its way to a resolutionfor now, anyway. But a basic difference in the language used by the two sides will remain. Would ending the cuts be a tax increase, or simply a return to the status quo?
A reasonable person could argue that it’s both. But such equanimity seems to be unacceptable in today’s political climate. You have to choose a side: black or white, yes or no, plutocracy or socialism.
Colorado has a similar debate. It bubbles up from time to time when people talk about the Taxpayer’s Bill of Rights, the revenue-limiting amendment that passed in 1992 with a 53.7 percent favorable vote. It was sold as a way to ensure that no tax could be increased without approval by a majority of the voters affected, but its multiple provisions have severely limited the Colorado legislature’s flexibility to deal with fiscal problems.
If TABOR simply had said no tax may be increased without voter approval, it wouldn’t have caused nearly the problems it has caused. The Colorado legislature still would be the most impotent in the country — every other legislature has some way to raise taxes on its own — but at least the rules would be clear. Better yet, the word “tax” could be clarified by saying “tax rate,” because that’s where opinion is divided on TABOR.
The amendment’s fans argue that when state revenues increase, it’s the same thing as a tax increase. TABOR’s detractors say it can’t really be called a tax increase, because the state did nothing to compel an increase in revenue. In fact, during the few economic boom years when there actually were TABOR refunds — not the much more common state income tax refunds people get when they overpay their withholding — the state actually lowered the income tax rate.
What happened is that people were spending more and earning more, so the state collected more tax revenue than it was allowed to keep under TABOR’s formula, and then had to give some of it back. To call this revenue increase a tax increase is like saying the state raised your taxes because you bought a Maserati instead of a used Geo; or because you won the lottery.
While it may be said that both sides in the Washington debate have a point, the same can’t be said of the Colorado debate. It’s either a tax increase or it’s not.
That argument resurfaced with the heat of a volcanic eruption in 2005, when TABOR’s most difficult provision — the one that kept ratcheting down the size of state government relative to the rest of the economy — was removed by Referendum C.
Ref C’s opponents insisted it was a tax increase; its supporters said it was no such thing.
The referendum passed narrowly, with 51.9 percent approval, and in an off-year election where only 40 percent of the electorate voted. TABOR passed at an election with a phenomenal 80 percent turnout (an election, not coincidentally, that was heavily influenced by the presidential candidacy of Ross Perot and his early, anti-establishment, Tea Party-like message).
Both sides in the Colorado debate might be able to live with a short, precise, vote-on-tax-rates amendment to replace TABOR. There’s a legal question, though, of whether a multi-provisioned collage such as TABOR can be repealed with a single amendment — especially since voters have approved a single-subject rule for ballot issues, a rule the legislature intended as a way to prevent future TABORs.
And then, of course, there are always the language questions: Is it a tax, or isn’t it? Is it a compromise, or capitulation? A dictionary doesn’t seem to help.
Fred Brown (punditfwb@aol.com), retired Capitol Bureau chief for The Denver Post, is also a political analyst for 9News.
