(The Center Square) - Colorado's Senate Finance Committee advanced a pair of bills that combine to overhaul the state's tax code - bills that drew criticism from business and free market groups.
Both bills advanced by a 4-3 vote. Republican Sens. Paul Lundeen, R-Monument, Ray Scott, R-Grand Junction, and Dennis Hisey, R-Fountain voted against the package.
House Bill 21-1311 would expand the Child Tax Credit by limiting several common business tax deductions. Some deductions that would get the ax include food and beverage expenses at restaurants and limits on capital gains taxes.
According to an analysis of the bill by the Legislative Council Staff, a nonpartisan arm of the General Assembly, the bill could raise as much as $57 million by fiscal year 2023.
Additionally, House Bill 21-1312 would revamp the state's property tax code by adjusting the state's insurance premium, property, sales and use, and severance taxes.
Two examples include phasing-out exemptions for coal plants and requiring net-back deductions for oil and gas facilities to be determined by the company's gross income.
A fiscal note for HB21-1312 estimates it could increase state revenues by up to $145 million by next year.
Both bills are sponsored by Sens. Chris Hansen, D-Denver, and Dominick Moreno, D-Commerce City, and Reps. Mike Weissman, D-Aurora, and Emily Sirota, D-Denver.
"The pandemic has both exposed and deepened existing inequities as well as created new ones," Moreno said in a statement. "As we recover, we can either continue business as usual, with decades-old special interest tax loopholes benefitting a handful of entrenched interests, or we can reform our tax code and uplift hardworking families, small businesses, and the most vulnerable Coloradans. The choice is clear."
Critics argued that the plan puts the tax money in the wrong hands. Sen. Paul Lundeen, R-Monument, sympathized with the legislative intent but advocated for creating a more revenue-neutral package would put more money in the pockets of working Coloradans and not in state coffers.
"That's one way to keep more money in the active economy rather than in the state's savings account," he said during the committee hearing.
Some business owners are opposed to the plan as well. Kelly Brough, CEO of the Denver Chamber of Commerce, said in a statement that the impact to corporate sales, use, and property taxes are overly burdensome on small businesses at a time when they need local support the most.
"This legislation will unnecessarily complicate Colorado state tax filings for multistate corporations, negatively impact nonprofits, restaurants and college savings and decouple Colorado from federal tax cuts intended to help small businesses," she said in a statement.
Chris Brown, Vice President of Policy and Research at the Common Sense Institute, a free enterprise think tank, said it's important to ask why lawmakers consider the tax increases necessary.
Earlier this week, Democrats unveiled their plan to spend $3.8 billion in federal stimulus dollars that Colorado would receive if the American Jobs Plan passed through Congress. However, the details of the plan were scant.
Meanwhile, an analysis of state tax revenue by Pew Trusts, a nonpartisan think tank, found that Colorado's tax revenue has returned to its pre-pandemic levels.
"This is about a $200M net tax increase starting amidst an economic recovery with no clear reason for needing the additional state revenue," Brown said in an emailed statement. "State taxes have more than recovered and both state and local governments have billions of federal dollars yet to be spent."