This November, Colorado citizens will see Proposition CC on their election ballot. It begins simply “Without raising taxes…” But what does that really mean?
Proponents of the initiative argue that Prop CC does not increase the 4.63 percent Colorado individual income tax rate, therefore it does not “raise taxes.” Prop CC goes on to ask “…may the State keep and spend all the revenue it annually collects after June 30, 2019, but is not currently allowed to keep and spend under Colorado law…” That sounds to me like the State wants to keep more of your monet. So how would that work?
We all know the drill. You work hard all year and your employer deducts $2,000 (for example) from your paycheck and sends it to the State. In February, you complete your tax return that is way too complicated, but you find out your employer withheld $200 too much out of your paycheck and the State sends it back. Good for you. You only had to pay $1,800 in Colorado income taxes for the year.
Same scenario as above, but this time your tax return showed that the correct amount of taxes were withheld by your employer. You’re disappointed as you could really use that tax refund to buy clothes for your kids that seem to be like growing weeds. But once the State gets everybody’s tax returns, it determines that as a result of your Taxpayer Bill of Rights that is part of the Colorado Constitution (and controls the amount of taxes you owe every bit as much as any other provision of the State tax laws), the State actually did collect too much income tax from you and everyone else and now they owe you a refund of $150. Good for you again. You still only had to pay $1,850 in Colorado income taxes.
But now we have Proposition CC. If passed, the State will “keep and spend all the revenue it annually collects.” That is $2,000 that your employer withheld and sent to the State. No $150 tax refund now. So, did Prop CC raise your taxes? Maybe not the individual income tax rate, but it definitely increased the amount of money that you paid to the State of Colorado that the State will “keep and spend.” In my opinion, that is “raising taxes.”
So, keep your money, buy your kids some new clothes, enjoy a night on the town or do whatever you want with your money. It’s your money. But you have to vote “no” on Proposition CC to do so. I know I am.
Certified Public Accountant