Low income people get more and high income people get less.
DENVER — Next month, the state will begin sending a portion of your tax refund – a refund you get due to the Taxpayer Bill of Rights (TABOR).
Single filers will receive checks for $750. Joint filers will receive checks for $1,500. This money will come by physical check in the mail.
These checks conveniently arrive before the November election. Colorado Democrats pushed for those direct controls, with the help of a few Republicans, to get voters’ money now. In doing so, it changed the amount each person will receive.
Given that $750 goes to each person who filed state taxes before June 30 and lived in Colorado all of 2021, that changes the pool of money that would normally be split among six income levels.
Low-income people will get more money because of the direct check, while high-income people will get less money.
“I think what we have this year is going to work very well. It was also based on the need to act quickly because of the economic pressure that people are under, we wanted to get reimbursement checks to people as quickly as possible. ,” State Sen. Chris Hansen (D-Denver) said. “And so having a lump sum payment was really a helpful way to expedite that process.”
Hansen helped pass direct control to the state legislature.
This is a feature of TABOR, which Hansen would prefer to do without.
“I think the state would be much better off without the constitutional restraints found in TABOR,” Hansen said.
TABOR limits the amount the state can keep and spend each year. When the state exceeds this limit, TABOR refunds occur.
The first TABOR refund mechanism is a property tax exemption for seniors and veterans. The second is a temporary reduction in the income tax rate. Normally, the third mechanism is a sales tax refund that goes through six income levels and is returned as tax credits when state income taxes are filed.
This year, the state will issue direct refunds, which means the six-tier tax credit fund is reduced from $3.2 billion to $514 million.
“Having a fairer, less regressive reimbursement mechanism is a good result for this year,” Hansen said.
Low-income people will receive $211 more between the direct check and next year’s tax credit than they would without the direct check.
High earners will receive $951 less between direct check and next year’s tax credit due to fair direct payment by check.
State Sen. Bob Rankin (R-Carbondale) said he is against fair distribution and would prefer the state to cut income taxes. A lower income tax would mean that Coloradans would keep more money during the year and reduce the change of state reaching a TABOR refund level. However, if there is a lower tax rate and the state does not meet a TABOR reimbursement level, it means that the state may have fewer dollars for the public programs it funds.
Hansen would still prefer to do without TABOR to have more money for some of these programs.
“We need to fund our schools better, fund higher education better, do more about state infrastructure, and the current restrictions we have because of TABOR are significantly hampering our ability to deliver those things. voters want,” Hansen said. “I think there are clear needs that aren’t being met. We are still way behind K-12. And so, I think for most working families, they would rather have that investment in schools than a little addition to a refund check. “
People who filed taxes with an extension can expect checks to be mailed by January 31, 2023.
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