Colorado legislators have begun advancing a package of bills that could reduce tax breaks by a combined $746 million, largely to businesses. And on this week’s episode of “Colorado Chamber Office Hours,” I talk with the lead advocacy group for the bills as well as with a prominent tax expert about just how sweeping the impact of these proposals could be.
Caroline Nutter, policy manager at the Colorado Fiscal Institute, explains how three of the bills will generate $560 million annually for a new Family Affordability Credit to replace an existing tax credit for lower-income families and ensure the tax break doesn’t turn off during years of financial shortage. And she argues that the changes will make the tax code fairer by doing things like decoupling from federal tax breaks that overwhelmingly benefit larger corporations and repealing a sales-tax exemption that applies to downloadable software but not to prepackaged software.
Phil Horwitz, state and local tax director at Baker Tilly, counters that some of the proposals, such as the rollback on net-operating-loss deductions and change to the 80/20 rule impacting companies that do substantial business overseas, will hurt Colorado’s already declining business atmosphere further. And he argues in the big picture that making tax policy to generate money specifically for one new tax credit is a poor move when taxes should be considered on their own merits rather than on the basis of how much they can bring in for one kind of break.
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