Closing Special Interest Corporate Tax Loopholes
January 30, 2010
I have never met a person who felt we should create special interest corporate tax loopholes. In fact most have wondered, then why or how did they get into law? Simple. They lobbied successfully to redistribute the taxes away from them and onto you and claimed it was in your best interest to do so.
The Denver Post documents that, "The state faces a shortfall of at least $1.3 billion in the 2010-11 budget year and will have bridged a $2.2 billion budget gap in the current year.
So in a budget climate where the additional $1 billion in cuts we need to make means we are closing schools, deferring repairs on state roads, buildings and bridges, closing DMV offices, closing beds for the mentally ill at Ft. Logan, funding veterans, higher ed, services for developmentally disabled and mentally ill at the lowest levels in the country, making our 4th reduction on provider reimbursement rates in Medicaid, reducing treatment programs in prisons — have we done everything to be fiscally prudent with existing laws and funds?
The answer is no. There are several special interest corporate loopholes that shift taxes away from corporations and onto you. We intend to close those loopholes. These are not enough to balance the budget without making significant other cuts, however, it would be irresponsible in this budget climate to leave them on the books. These groups fought hard for their special treatment and will fight hard to keep them, but don't be fooled. What are we talking about?
Junk Mail Loophole - $1.5 Million
Companies in the U.S. spend tens of billions of dollars producing and sending junk mail every year. In Colorado, they don't pay taxes on those materials.
Industrial Energy Use Loophole
Manufacturing companies currently consume as much energy as they please without paying taxes on it.
Doggie Bags Loophole – $2.1 Million
Currently, restaurants do not have to pay taxes on cartons, bags, plastic-ware and other items not essential to serving food to diners.
Junk Food Loophole - $18 Million
Colorado does not tax food to ensure that people, regardless of how much money they make, can afford nutritious foods that promote health and reduce risks of malnutrition, obesity, and other significant health problems. Candy and soda are high-calorie, low-nutrition foods, not the necessities that must be protected by tax-free status. Additionally, eliminating the tax exemption on candy and soda may deter the consumption of unhealthy foods, which will lead to a healthier population and reduce the burden that poor nutrition imposes on our healthcare system.
Agricultural Compounds, Pesticides, & Bull Semen Loopholes - $4.6 Million
Agriculture is a $16 billion a year industry in Colorado. Right now, farmers and ranchers do not have to pay taxes on the hormones, pesticides, insecticides, fungicides, and other compounds used to treat their livestock and crops. They also don't pay taxes on prized bull semen used to breed genetically-superior cattle.
Software Loophole - $20.4 Million
We all pay sales tax when we buy a new computer program or game, but currently, businesses do not have to pay that same tax, which depletes our budget by tens of millions of dollars.
Online Shopping Loophole - $5 Million
Currently, companies who sell goods online in our state do not collect state sales tax. This creates unfair competition for businesses physically operating in Colorado that must collect sales taxes.
Lower-Standard Alternative Fuel Vehicles Loophole – $2.7 Million
The state offers incentives in the form of tax credits for purchasing certain alternative fuel vehicles. To help balance our budget, this year we are eliminating the credit for the lowest-standard category of these vehicles.
Alternative Minimum Tax and Tax Credit
The alternative minimum tax is widely considered to be unfair, needlessly complex, and antiquated. That is why we plan to eliminate it.
Net Operating Loss - $16.8 Million
By capping net operating loss claims at $250,000 for the next three years, we are asking businesses to take a temporary timeout from accounting methods that allow them to reduce their tax liability in profitable years.
Enterprise Zone Investments - Subsidizing Developers
This proposal asks big corporations to take a temporary timeout on tax credits provided in enterprise zones. Right now, businesses can take a 3% tax credit on equipment investments. This measure would limit the size of the credit to $250,000, which will only affect big businesses.
Our tax policy should be simple, fair and should not give big corporations special breaks that redistribute financial burdens onto families. If they are not paying their fair share, then you are paying more than your fair share.
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Hi Morgan,
Thanks so much for your advocacy on this issue. Don't forget to eliminate the remaining $100,000 Colorado capital gains exclusion. (It was reduced last year from an unlimited exclusion by Chris Romer's bill).
Here's my latest submission to the Denver Post:
"Business special interests are crying, "Hands off my tax exemptions!"
Don't invite the business lobby to a Dutch treat dinner. They'll opt out of paying their fair share and leave you the bill because, well, they're special."
Also, I was just imagining GOP/business lobby budget balancing ideas:
–Tax on insulin: $102 million
–Tax on medical oxygen: $540,000 per year
–Protect tax exemption on bull semen: priceless.
Finally, I was wondering how much could be raised by eliminating the tax deduction for tuition program contributions on taxpayers making over, say, $250,000 a year. The program was designed to help middle and low income people with college costs. Wealthy taxpayers don't need that help. You might want to check with Chris Romer to see if he has an answer to this question.
Thanks,
Bob Kihm, CPA
303-893-6552
— bob kihm,303-893-6552 · Jan 30, 09:59 PM · #