Updated: Aug 1
The TABOR amendment and the Gallagher amendment both set limits on taxation unless a specific ballot issue is put before Colorado’s voters.
The TABOR amendment sets the upper limit of inflation plus population growth on tax increases that do not require a vote.
The Gallagher amendment limits personal property taxes to 45% of all tax revenues, and the rest from commercial property taxes. Since the percentage of the value of commercial property is fixed in the amendment, the revenues depend on the value of the commercial property. In times of economic expansion, the total amount of commercial property tax increases, which allows the personal property tax assessment to increase, so long as it does not exceed the TABOR limits. In times of economic contraction, the total amount of commercial property taxes decreases, which causes the personal property tax assessment to decrease.
In essence, the two amendments are a beautiful partnership in fiscal restraint – when times are good, the taxation is limited by TABOR; when times are bad, we get a discount, and our state government goes on a diet. These amendments are unique to Colorado.
Lest you bask in a feeling of wellbeing, be aware that the Democrat dominated state government has cynically pursued a work around – fees. Fees currently account for half of the revenues collected by the state, and are not considered taxes, therefore exempt from TABOR and Gallagher. There are no limits on this form of forced monetary extraction. Fees come from licensing of all kinds of activities by Colorado citizens, and also are collected to fund all sorts of projects via a state enterprise fund — whether it is qualified to be established under the state Constitution or it is being created by the state legislature.
But before you lose hope, there are the “Vote on Fees” (Initiative 295) and “Real Fair Tax” (Initiative 306) grassroots efforts to reduce forced monetary extraction that were both turned into the Secretary of State’s office on 7/31 with many more signatures than needed to make the ballot.
Vote on Fees, if passed by voters, will require that any new state enterprise fund with a projected revenue from fees and/or surcharges exceeding $100 million total in its first five years must be approved by a statewide election.
The Real Fair Tax is in response to changes in the Federal Tax law that lowered the tax rate while eliminating deductions/exemptions, so average income rose, but less taxes were paid in the end. Our state income tax is calculated on the initial income reported on the Federal form, which rose though less Federal tax was paid on it. So the state got to pocket more of our money without raising taxes. The Real Fair Tax, if passed, would lower the state’s flat income tax rate from 4.63 percent to 4.55 percent, giving us our money back. It would take effect with the 2020 tax year.
I am all for these initiatives, will campaign on support for them, and will work to defend the repeal of TABOR and Gallagher amendments.
This is what I love about Colorado. Our citizens defend their pocketbooks. Just the way a democracy should work.