Coloradians will soon receive a welcome surprise in the mail – a check from their state government. The comptroller’s office announced that enough tax revenue had been generated to issue every Colorado household with a modest but significant refund of $ 70.
The idea of reducing the burden on taxpayers seems almost unknown these days, especially as debate rages in Washington over the Biden administration’s tax and spending program. But in the Centennial State, policymakers know that taxes don’t grow our economy, they slow it down.
Governor Jared Polis understands this truth. Last month he proposed eliminating Colorado income tax. “Indeed, when you tax something, you penalize it,” he said. While the governor’s proposal may be a tough sell, let’s not forget that last year Colorado voters approved a proposal to lower the state’s income tax from 4.63 percent to 4 percent. , 55%, and residents are working to introduce a similar voting measure this year to further reduce the rate.
This kind of forward-thinking tax policy flies in the face of negotiations in Washington, where President Biden and some members of Congress have proposed to increase the corporate tax rate in the United States.
While the rate hike on “big business” may be a compelling soundbite, it is not good policy – especially as businesses and workers are struggling to recover from the COVID pandemic – 19 and face new threats from the Delta variant. As Governor Polis noted, raising rates will penalize our job creators and workers, resulting in fewer jobs, lower wages and lower productivity.
Research shows that corporate taxes are passed on overwhelmingly to workers. According to a Congressional Budget Office analyst, workers bear more than 70 percent of the long-term burden of a corporate tax. This means wage cuts, fewer job opportunities and less investment in training and equipment.
The White House has promised that an increase in corporate taxes would affect neither most middle-class families nor 97% of small businesses. Still, an analysis by the Nonpartisan Joint Committee on Taxation found that 98% of Americans who earn less than $ 500,000 would be affected, including 1.4 million small family businesses that would start a C corporation.
Raymond Keating, chief economist for the Small Business and Entrepreneurship Council, has warned of rate hikes as businesses continue to struggle to turn the page on COVID-19.
“Tax increases are always negative, but tax increases when trying to recover from a pandemic are really misguided,” Keating wrote.
There are ways to ensure that large corporations, which use tax avoidance measures when rates are too high, pay their fair share. This requires keeping rates low, filling loopholes and simplifying the tax code, which would also generate significant income. Raising tax rates unilaterally will not solve the problem. It will make matters worse and put honest, hard-working companies further behind their larger counterparts.
Almost four years ago, Congress voted to cut the corporate tax rate in the United States, then the highest in the industrialized world. This realignment put American companies on a level playing field with their competitors around the world and enabled significant growth throughout Colorado and the United States.
In 2018 and 2019, national wages rose 4.9 percent, the fastest two-year growth rate in two decades. In 2019, unemployment hit its lowest level in 50 years and median household income rose 6.8% year-on-year. Weekly wages in Colorado hit the nation’s highest annual growth in the third quarter of 2019 – in a “landslide,” as the Denver Business Journal reported.
These gains demonstrate what Colorado policymakers know. A competitive tax code benefits our job creators, our workers, our communities and our economy. It shouldn’t be a party line issue. The bipartisan infrastructure package passed by the US Senate last month showed Congress can invest in our country without raising taxes on businesses and workers.
Here in Colorado, Democrats and Republicans are working together to advance tax policy that will grow our economy, create jobs, and expand our middle class. I urge Washington’s rulers to do the same and oppose any legislation that would increase the corporate tax rate in the United States.
State Representative Matt Soper, a Republican from Delta, represents parts of Mesa and Delta counties in the Colorado legislature.