Colorado Senate Leads Off With Working Class Tax Credit

Colorado Senate Bill 13-001, as announced yesterday by the Democratic Majority Office:

When the Colorado General Assembly reconvenes on January 9, President Morse will introduce Senate Bill 1, the Colorado Working Families Economic Opportunity Act of 2013. The Act would create a tax credit for working families, a child and dependent care credit, and a child tax credit against state income taxes.

Many Colorado families are still struggling from the impact of our slow economic recovery, which has made it hard for wages to keep up with the increasing costs of basic necessities like childcare and transportation. This bill could provide a financial boost for more than 370,000 working families.

The Colorado Working Families Economic Opportunity Act is a refund mechanism funded by a state revenue surplus, in accordance with the Taxpayers Bill of Rights (TABOR). Additionally, this proposed legislation would not create more government or bureaucracy because it is based upon already established federal guidelines and qualifications for earned income tax credits.

As further explained by KRDO-TV Colorado Springs:

Senate Bill One, the Colorado Working Families Economic Opportunity Act of 2013 proposes three tax credits. One would be for families who earn up to $60,000, the second would be for families with children and the third would be for families who provide for someone like children or an elderly parent.

“If you’ve got a single mom with two kids, making $32,000 a year, she’d get about $720 worth of credit that she would then be able to use to pay for childcare, pay for medical expenses, pay for transportation expenses, those kinds of things” Senator Morse said.

He said families receiving the tax credits wouldn’t be the only ones affected. He said the small businesses that employ them would also benefit, as workers would be able to attend work more consistently. And he said by spending that money they keep, those individuals would stimulate the economy.

The effect of passage of these refundable tax credits would be similar to the help to working families provided by the Democratic-favored federal Earned Income Tax Credit, and paid for with improving revenues now coming in as the economy recovers. Particularly with the recent end of the federal payroll tax “holiday” benefiting many of the same working class taxpayers, it’s tough to argue against this credit despite its expected fiscal note. As was the case with the EITC, we expect to see some impact studies showing this plan having a greater positive economic impact than, say, funding the Republican-favored Senior Homestead Exemption.

A clever initiative for Senate Democrats; we’ll be curious to see the arguments against this.

16 Community Comments, Facebook Comments

  1. Raging Bender says:

    What is there is no TABOR surplus in a given year?  Is the tax credit null and void?

    • Under the part of Ref. C that’s still around, it should be a long way between the current budget and the TABOR cap – wouldn’t that allow us to recover to 2007 budget levels plus inflation plus population growth?

      So under that theory, this bill provides no relief. Also, I wasn’t aware that TABOR allowed refunds on a selective basis.

      Unless we’re misreading this and the TABOR language is “this is post-revenue money, so it doesn’t affect the TABOR cap going forward”. Then it makes a lot of sense.

  2. DavieDavie says:

    1. The working poor don’t deserve a break if they’re not smart enough to inherit their wealth, or at least work some sweetheart deals with their Crony-Capitalist buddies.

    2. Since taxpayer money, by definition, belongs to the taxpayers, not the government, it should be returned to just those taxpayers that can best utilize it — the job creators.  Then it would be more efficiently used in off-shore accounts, or for retired job creators to build up their estates for their progeny.

    3.  Giving money to the working poor only creates more poverty and illegal immigration.  Instead of investing the money, poor people will go to discount stores, where they only pay their clerks minimum wage, to buy cheap food, clothes, booze and gasoline.  Putting money in the hands of poor people just makes more poor people. Besides, ever notice that the clerks at those places are also poor and from foreign countries? Legal immigrants, my ass!

    We all need to break the vicious circle of poverty and patronize high-end retail stores only!  

    Poverty would disappear if all you busy-bodies would just try ignoring it long enough!

  3. (and the TABOR part of the bill isn’t about refunds over the cap)

    … I’d expect challenges to come from the left if from anywhere. Many vital programs have been cut to the bone over the past few years, and a tax credit that lowers available budget revenue would reduce money that could be used to re-invest and rebuild.

  4. Algernon MoncriefAlgernon Moncrief says:

    but, such state revenue cuts must be replaced by revenues from other sources.  Colorado is already a tax haven.  We have the lowest (or near lowest) state revenues per capita in the nation.  We have defunded our public education system, allowing tuition rates to go through the roof, in spite of the fact that we are the 15th wealthiest state in the nation.  It is embarrassing and irresponsible.  

    It must also be remembered that the State of Colorado is at this moment in breach of public pension contracts.  We are not even paying for the public services that we have already consumed.  By all means help the poor in Colorado, help bring down tuition rates, but do this through a more progressive tax system.    

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