Bid to Return Tax Reform Windfall Advances, Despite Dem Resistance
DENVER – Senate Republicans made progress yesterday on a proposal to refund to Coloradans much of the windfall the state collects as a result of federal tax cuts, via a similar-sized reduction in state income tax rates. Although they adamantly opposed federal tax reforms, Democrats on the Senate Finance Committee indicated that they want the state to keep and spend every extra dollar it inadvertently takes in.
Senate Bill-61, which lowers the state income tax rate from 4.63 to 4.43, a reduction of .20 percentage points, cleared the Senate Finance Committee on a 3-2 vote. The bill was crafted by Senate President Kevin J Grantham (R-Canon City) and President Pro-Tem Jerry Sonnenberg (R-Sterling) after Governor John Hickenlooper declined to honor the agreement made in Section 9 of SB17-267, passed last year, to include a list of potential spending cuts totaling 2% in this year’s budget proposal.
Sonnenberg and Grantham argued that the modest but meaningful state income tax reduction would help offset any extra revenue the state collects from Coloradans as a result of federal tax changes. They prefer to see the money returned to taxpayers and the private sector economy.
Both leaders pointed to record state budgets and soaring spending to challenge the idea that the state needs more money. “We don’t have an income problem in Colorado, we have a spending problem. Continuing to limit the growth of government and allowing taxpayers to invest their money as they see fit should be a priority,” Sonnenberg said.
And leaving it in the hands of citizens, rather than government, could give an additional jolt to the economy, as President Grantham pointed out. “Anytime we see income tax reductions, we see increased economic activity,” added Grantham.
Democrats on the committee argued that returning the windfall to taxpayers would somehow create hardship for state government. “Republican’s want to prioritize that surplus by fixing our roads and return those tax dollars to the citizens,” Grantham said.
Republicans prevailed in the end, on a 3-2 party-line vote. SB-61 now moves to the Appropriations Committee for consideration.