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Colorado taxpayers to lose $2.8 billion in TABOR refunds due to legislature, study shows

Common Sense Institute says the state reduced just less than half of expected TABOR refunds to Colorado taxpayers between 2024 and 2026

As a result of 101 bills passed by the Colorado legislature, over $2.8 billion in state TABOR refunds will not go to Colorado taxpayers between 2024 and 2026, according to a recent report from the Common Sense Institute.

The $2.8 billion loss is just less than half of the projected $6 billion in TABOR refunds for the next three years, CSI found in its report following the 2024 Colorado legislative session.

“Legislators focused intensely on TABOR refunds this session,” CSI Mike A. Leprino Fellow Lang Sias said in a statement.

“What started a few years ago,” he said, “has snowballed into what we saw play out during the 2024 session where more than 100 bills redirected TABOR refunds.”

TABOR refunds come from excess state revenue that is sent back to Colorado taxpayers in the next fiscal year.

Over the next three years, Colorado taxpayers will lose $2.8 million in TABOR refunds mostly due to tax cuts, and due to the cost of the bills impacting TABOR, according to CSI’s TABOR refund report.

TABOR refund reductions will increase over the next three years, according to CSI’s report.

The 2024 legislative session has resulted in TABOR refund cuts of $523 million in 2024, $1.06 billion in 2025 and $1.25 billion in 2026, according to CSI.

The redirecting of TABOR dollars happened “amid unprecedented revenue growth and a $40 billion state budget,” CSI VP of Policy & Research Chris Brown said in a statement.

“Lawmakers circumvented the standard refund mechanisms through a long list of proposed tax rate reductions, tax credits, and distribution efforts,” he said.

Most of the money redirected from 101 TABOR-related bills passed targeted “mainly families and low-income Coloradans,” CSI’s report said.

Those bills consisted of tax rate reductions, tax credits and redistribution.

CSI’s report said legislatures cutting TABOR refunds “broadly undermines TABOR’s intent by divorcing taxpayers’ contributions to state revenue from the values of refunds they receive and deciding for them how that money should be spent instead."

Of the remaining $3.28 billion, $3.1 billion was distributed as direct payments of $800 to each Colorado taxpayer.

The remaining $180 million was diverted for the Earned Income Tax Credit approved during last year’s legislative season.

Last November, Colorado voters turned down Proposition HH, a proposal to take TABOR refunds in exchange for property tax relief.

Recently, due to an accounting error, a separate $67 million in TABOR refunds is to be sent back to Colorado taxpayers.

The state's TABOR refund legislation, CSI's report said, "will diminish taxpayers’ agency to decide, whether by saving, investing, or donating to charity, how best to allocate money that they would normally be owed."

LKY: Do you think they make all this "tax legislation" so complicated that we can't understand it and then we can't complain? I thought we didn't have enough money to cover the $40 billion dollar budget anyways?

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