‘Tax it, and you’ll get less of it’ | opinion

Debbie Brown

The January Consumer Price Index saw the US inflation rate jump to 7.5% in urban areas in the past 12 months, and the Denver metro rate was 7.9%. Fueled by supply and labor shortages, irresponsible government spending, and rising demand, inflation is eroding Americans’ ability to purchase what they need. The uncertainty of current geopolitical events is creating even larger spikes in the cost of oil, gas and grain. And recent economic forecasts predict multiple interest-rate hikes in 2022.

It’s hard to know what will make things better, but we do know what will make them worse. Fortunately, politicians in Washington, DC got the message from voters and dropped a proposal in this case to raise corporate tax rates. They were thinking about raising the corporate tax rate to 26.5% and levying a new 15% tax based on what’s called book income — the amount of income companies make prior to assessing tax deductions and credits.

Fortunately, they heard loud and clear how higher tax rates contribute to rising prices on the goods and services middle- and low-income families depend on.

Dropping a bad idea is good, but embracing a good idea is even better. Policy makers can ease the burden of inflation by reducing taxes and fees on hardworking Americans. Let’s start here in Colorado.

Kudos to Gov. Jared Polis for proposing to lower taxes in his recent State of the State address. Specifically, he recommended delaying the 2-cents-a-gallon gasoline fee that will soon take effect, waiving fees for incorporating a new business, and reducing professional licensing fees for certain health care workers. If enacted, Coloradans would save more than $100 million.

Policy makers could certainly go further to help Colorado families and businesses during these difficult times. Last year, Polis told attendees at the Steamboat Institute’s Freedom Conference that he approved eliminating the state’s income tax and finding another way to generate revenue that doesn’t “discourage productivity and growth.”

He’s right; income taxes tax productivity. Tax it, and you’ll get less of it, the old economics adage goes. We know that the lower corporate tax rates that passed in 2017 helped fuel the pre-pandemic economic boom and reduced the unemployment rate to the lowest it had been in 50 years. The tax reform leveled the playing field for US companies globally.

According to the nonpartisan Tax Foundation, Colorado ranks 20th on the foundation’s State Business Tax Climate 2022 Index. That means 19 other states have a healthier tax policy environment than Colorado. Our state was outranked by neighboring states Wyoming and Utah which took first and tenth place on the ranking, respectively. The index rating included states’ corporate, individual, sales, property and unemployment-insurance tax rates.

“We promise to use every single tool at our disposal to save hardworking Coloradans the money you need to live the life you want,” Polis said in his State of the State address.

There are plenty of options here. Why not think about long-term relief as opposed to temporary reductions? After all, employers and employees in Colorado are going to have to pay more to finance paid-family- and medical-leave insurance benefits starting on Jan. 1, 2023. The current legislature can offset those costs by instituting permanent individual and business tax relief . It’s also smart to pay off the federal loan to rebuild the unemployment insurance trust fund before businesses see dramatically increased unemployment insurance payroll taxes.

Colorado lawmakers cannot directly stop inflation, but they can help Colorado families keep up. By reducing fees and taxes on individuals and businesses, and on work and productivity, policy makers can help Coloradans keep more of what they earn.

Debbie Brown is the president of the Colorado Business Roundtable


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