Colorado has hundreds of tax credits and deductions for corporations and individuals that cost the state billions of dollars in revenue every year.
But are those “tax expenditures” working as intended?
No one knows for sure.
Thankfully, a bill that seeks to bring scrutiny to Colorado’s tax deductions is winding through the legislature and appears to be good government in the making.
In 2011, Colorado reportedly spent $4.6 billion on tax credits, deductions and exemptions — reducing the amount of taxes that households or corporations owe.
“When states offer economic development tax incentives, they have less money to spend on education, transportation, health care, and other critical services,” according to a
“Conversely, if states do not use incentives or use them well, they may be forgoing opportunities to create jobs and attract new businesses.”
States ought to know whether incentives they offer are worth the cost, particularly because tax expenditures are typically written into the tax code and continue indefinitely without any oversight.
Typical government direct spending regularly gets audited and scrutinized. So should tax expenditures.
House Bill 1205 seeks to shine a light on the mystery world of tax expenditures.
The bipartisan legislation offered by Reps. KC Becker, D-Boulder, and Lori Saine, R-Dacono, would create a year-round joint legislative committee to review tax expenditures and recommend legislation for any repeal, modification or continuation.
Roughly 10 states are already doing this.
Colorado would be smart to join them.
To send a letter to the editor about this article, submit or check out our for how to submit by e-mail or mail.
