Politics

Gov. Polis signs cuts to income, sales and property taxes into law as ballot fight looms


Sponsors of the property tax relief bill, Sen. Chris Hansen, Democrat from Denver, right, and Sen. Barbara Kirkmeyer, Republican from Larimer and Weld counties, joined Gov. Jared Polis for a bill signing ceremony at the Boettcher Mansion in Denver on Tuesday, May 14, 2024. (Photo by Hyoung Chang/The Denver Post)

Colorado Gov. Jared Polis signed several tax-related bills into law Tuesday, including two that deliver what officials are touting as historic cuts to taxes of different kinds.

One reduces income and sales taxes. Senate Bill 228 cuts the state’s income rate by up to 0.15% in years when state revenue handily exceeds the cap set by the Taxpayer’s Bill of Rights, with a similar mechanism for the state’s sales tax rate. That equals an estimated $466 million this year — with the income tax rate reduced by the full amount, to 4.25% — plus an estimated $222 million reduction in sales taxes through a slight decrease in that rate, shaving off 0.13 points to make it 2.77%.

The second law, passed as Senate Bill 233, comparatively dwarfs the first. It makes adjustments that cut property taxes across the state and reduce what would be the total owed by taxpayers by an estimated $1.3 billion, according to bill sponsors.

Overall, state officials have estimated that law will save the typical owner of a $700,000 home roughly $400 a year compared to current law, though the exact amount depends on local mill levies.

But the tax cuts come with significant caveats.

The income and sales tax cuts draw on the same money — TABOR surpluses — that normally would be returned to taxpayers through refunds. And while the property tax cuts will reduce what property owners would otherwise owe, there’s no guarantee their bills won’t still rise as property values increase.

The property tax cuts also don’t represent an end to the tax wars that have dominated the ballot box and legislative sessions in recent years, as outside groups prepare competing, deeper reductions to put to voters this November.

Still, the governor struck a celebratory tone.

“This is exciting,” said Polis, who has long advocated for reducing the income tax and pushed lawmakers to pass it among broader tax changes that included child tax credits. “With these historic savings, Coloradans and businesses will be able to hold onto more of their hard-earned money.”

“We needed a serious, statewide response”

Polis, lawmakers and advocates took thinly veiled shots at ballot initiatives 50 and 108 — two proposals backed by conservative advocacy group Advance Colorado and the business group Colorado Concern that would put tight leashes on property tax rates and collections.

The 2020 repeal of the Gallagher Amendment, which had kept residential property tax rates low at the expense of rising commercial rates, “left a void” in state tax policy right as the state went through a historic surge in home values, Polis said.

“There were some bad ideas out there” to replace it, Polis said. “There still are.”

Bill sponsors Sens. Chris Hansen and Barbara Kirkmeyer, a Denver Democrat and Brighton Republican, respectively, both noted the property tax measure specifically protects school funding. Just months ago, policymakers celebrated meeting constitutional school funding requirements for the first time in a decade.

The property tax law resulted from years of negotiations, buffered by temporary measures to blunt spikes in tax bills, …read more

Source:: The Denver Post – Politics

      

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