Even Democrat Governor Polis Calls Biden Potential TABOR Tax “Absurd”

For a governor who appears to always be strategizing how to put an end to Colorado's Taxpayer Bill of Rights, Jared Polis is now being put in the awkward position of fighting his own party to prevent Coloradans' TABOR refunds from being taxed twice.

Colorado Governor Jared Polis and U.S Senator Michael Bennet have expressed their strong opposition to the recent proposal by the Internal Revenue Service (IRS) to potentially tax TABOR refunds in the upcoming tax cycle. Governor Polis went as far as calling the idea "absurd," and it's not difficult to understand why.

Just six months ago, Coloradans were relieved when the IRS announced that federal taxes would not be deducted from refunds under Colorado's Taxpayer's Bill of Rights (TABOR). This provided much-needed relief to hardworking individuals and families in the state.

However, the new guidance released by the IRS has once again raised concerns about the taxability of these refunds. Colorado officials worry that the IRS may reverse its previous decision, bringing uncertainty to taxpayers.

Under the new guidance, individuals who claim the standard deduction on their federal income tax returns, which represents around 90% of taxpayers, will not have to include state tax refunds in their taxable income. However, those who itemize their deductions and have deducted all of the state taxes they paid must include the refunds in their taxable income.

"The IRS is proposing going back on 30 years of not treating TABOR refunds as taxable income," Polis said. "Our administration strongly disagrees with the IRS guidance as it fails to factor in that TABOR refunds are returning sales tax dollars in addition to income tax dollars and fees that our citizens have already paid and therefore are an entirely legitimate tax refund and should not be subject to further state or federal taxation."

It is important to note that TABOR refunds have never been federally taxed in the 30 years since Colorado implemented them. Earlier this year, the IRS considered taxing expedited TABOR refunds as economic stimulus checks, but ultimately decided against it.

"We think that this would cause about 10% or so of Colorado taxpayers to have to pay income tax on their TABOR refund. But that should be zero. Nobody should pay tax on a refund from a tax. It doesn't make any sense. I think what it's getting conflated with is some states have sent stimulus checks to people, arguably, that may be subject to taxation," Governor Polis told KRDO.

The above is especially true if you're a governor with eyes on stealing those refunds in perpetuity as part of a property tax scheme to do away with TABOR once and for all.