Governor Jared Polis on Wednesday enacted four bills to fundamentally restructure Colorado’s tax code.
“Today is definitely one of my most exciting days as governor as we provide tax breaks to the people of Colorado,” Polis said, touting the package during a signing ceremony at Boettcher Mansion. “Together, we are delivering significant tax relief so families can afford to live a little better in our great state and keep more money in their pockets.”
According to sponsor Rep. Emily Sirota, D-Denver, HB 1311 modernizes the state’s tax code, closes tax loopholes of special interest to large businesses and high net worth individuals, and benefits small businesses.
The bill Sirota took away with Rep. Mike Weissman, D-Aurora and the Senses. Chris Hansen, D-Denver and Dominick Moreno, D-Commerce City, are increasing the state’s earned income tax credit for low earners. Under current law, the Colorado Earned Income Tax Credit is available to those claiming the federal EITC. The bill increases Colorado’s credit from 15% to 20% of the federal credit.
It also funds the Child Tax Credit, which would provide up to $ 600 in tax credits per child to 200,000 families. This credit is intended to help pay for child care and other preschool expenses.
The changes are paid for by capping certain itemized deductions for taxpayers with adjusted gross income of $ 400,000 or more, eliminating the capital gains deduction and eliminating what is known as a “transfer” deduction from 20. % of business income created as part of federal tax cuts. and the employment law in 2017.
Meanwhile, the main provision of HB 1312, from the same group of sponsors, is to increase the business property tax exemption for small businesses to $ 50,000. These are property taxes that businesses pay on items such as desks, computers, phones, and other mobile equipment that they use to run their operations.
Under the bill, the first $ 50,000 of property would be exempt from these taxes, compared to $ 7,900. And while those taxes are paid to counties, the state would cover the costs of the bill. The measure also provides incentives for companies owned by employees.
The cost of the bill, around $ 19 million, according to the tax analysis, is paid for by tax policy changes for insurance, oil, gas and coal companies, which could not only generate about $ 150 million per year, but would also entail a TABOR reimbursement in 2022-2023 which would be paid the following year.
Before Polis put pen to paper, Weissman praised the work done to enshrine the policies into state law, noting that the bills were the culmination of a year of work.
“We’ve learned from our state auditor, we’ve learned from the experience of other states, and we’ve made changes that will help hundreds of thousands of low- and middle-income families who we know have hardships and tens of thousands of Colorado small businesses, “he said.
Polis also signed Bill 1327, a measure of Representatives David Ortiz, D-Littleton, and Kevin Van Winkle, R-Highlands Ranch, and Sens. Chris Kolker, D-Centennial, and Rob Woodward, R-Loveland, to provide tax relief for small businesses.
The bill allows intermediary businesses such as sole proprietorships, partnerships and S corporations to pay their state income tax at the entity level, rather than at the individual level, starting from the tax year 2022. These companies could pay taxes as a C-corporation, which would allow them to claim an unlimited deduction at the federal level for state and local taxes paid.
The governor closed the ceremony by affixing his signature on Senate Bill 293, which aims to reduce property assessment rates.
The measure of Hansen, Sen. Bob Rankin, R-Carbondale, Rep. Matt Gray, D-Broomfield and House Majority Leader Daneya Esgar, D-Pueblo, rewrites property tax classifications, dividing the two current classifications into six subsections and reducing the assessment rate for four of these new classifications.
Lawmakers on Tuesday had certainly laced up their running shoes, but the last day of the session turned into a sprint, then a chore. But at 7:41 p.m., the House crossed the finish line and adjourned sine die.
Senate Bill 293 was tabled on Wednesday evening, and on Thursday evening it is the 623rd and probably the last bill presented in the 2021 session. Its first hearing with the Senate Finance Committee attracted a small contingent of people normally seen as Democratic allies opposed to the bill.
According to Gray, the bill is designed to address “one of the paradoxes of this pandemic”.
“Even though a lot of people lost their jobs or had to postpone their jobs, we haven’t seen the cost of housing go down at all, or even go up,” he said. “We’re trying to tackle this head-on.”