In a disappointing turn of events, a bill aimed at lowering Colorado's income tax rate was rejected by the House Finance Committee on Monday. However, this setback is unlikely to deter Republican lawmakers from pursuing their goal later in the session.

The proposed legislation, House Bill 24-1065, sought to reduce both individual and corporate state income tax rates from 4.4% to 4% starting from January 1, 2025. Championed by Republican representatives Scott Bottoms and Rose Pugliese, along with Senator Barbara Kirkmeyer, the bill was a crucial effort to alleviate the burden on hardworking Coloradans.

The bill would have provided tax relief for families and individuals, but failed to garner enough support in appropriations committee, with a motion to advance an amended version falling short in a 6-5 vote. Consequently, HB 24-1065 was indefinitely postponed, leaving taxpayers without the relief they desperately needed.

If approved, it would have resulted in a reduction of state revenue by $1.32 billion, starting in the 2025-26 fiscal year. Furthermore, it was projected to decrease the state's obligations to refund taxpayers under the Taxpayer's Bill of Rights (TABOR). According to a fiscal note, the anticipated TABOR refund for the 2024-25 fiscal year was estimated at $1.79 billion.

PRIME SPONSORS

• Rep. Scott Bottoms

• Rep. Rose Pugliese

• Sen. Barbara Kirkmeyer

The bill would have ensured taxpayers kept their money instead of paying it to the government, only to be refunded later.

Tony Gagliardi, the state director of the National Federation of Independent Business, passionately advocated for the bill, emphasizing that Colorado already collects more revenue than it can legally retain. This surplus leads to inefficient TABOR refunds, hindering economic growth. Gagliardi rightly argued that a tax reduction would stimulate employment opportunities, benefitting both businesses and workers.

Democrat Rep. Chris DeGruy Kennedy argued that the income tax reduction primarily benefited the wealthy, implying that it had minimal impact on lower-wage earners. However, this argument fails to consider the broader economic effects of tax cuts, such as increased job creation and economic growth, which benefit all income brackets.

READ MORE:

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• TAX INCREASE FOR SHORT-TERM RENTALS SPARKS CONTROVERSY IN UPCOMING LEGISLATIVE SESSION

• COLORADO HOUSE BILL SEEKS TO PROVIDE TAX RELIEF FOR BABY PRODUCTS, BACK-TO-SCHOOL ITEMS

• THE IRS HAS CONFIRMED THAT THE 2024 TABOR REFUND CHECKS WILL NOT BE SUBJECT TO INCOME TAX

In contrast, Republican Representative Matt Soper highlighted the potential benefits of the bill, including its ability to combat inflation, increase the state's gross domestic product, and boost overall spending.

Multiple spokespeople from the education field voiced opposition to HB 24-1065, expressing fears it would lead to less investment in schools and educators — although bill sponsors said the bill would not touch education funding.

Democrats on the committee raised concerns about the bill making it harder for the state to provide essential services and suggested that the plan could backfire if the state faces hard times in the future, like a recession.