TABOR refund: $400 for Colorado taxpayers, $800 for joint filers by late summer

Single filers will get $400 and joint filers will get $800 this August in money the state must refund as a result of the voter-approved Taxpayer’s Bill of Rights, Democratic leaders announced at the Capitol Monday morning.

The Taxpayer’s Bill of Rights, or TABOR, requires the state to send portions of state revenue back to taxpayers in strong economic times, such as this one. In the current tax season, the state is sending back about $525 million. That’s all money over the “cap” set by TABOR, which is calculated based on how much revenues exceed inflation plus population growth.

TABOR refund money is sent to taxpayers in three ways: a temporary cut to the flat income tax rate, from 4.55% to 4.5%; property tax relief for senior and veteran homeowners; and sales tax rebates that are sent out in a six-tiered system, in which richer people get higher amounts back than poor and middle-class people.

Legislative Democrats think this scheme is broken and fundamentally inequitable. When Colorado’s economy is strong enough that refunds are required, they argue, more of the money should be returned to people who struggle financially. The legislature has the power to change how TABOR refunds are administered — in fact, prior legislatures have made almost two-dozen such changes in the last 25 years — but these Democrats have said for months that Gov. Jared Polis, also a Democrat, has argued to them that the refund mechanisms should not be amended.

Monday’s announcement represents a middle-ground approach. Rather than send back larger refunds to richer people and smaller ones to poorer people, all filers will get a flat amount from sales tax refunds. It’s a consequential decision, as economists project $2 billion available in refund money on tax returns for 2021-22.

The announcement does not affect the TABOR refund mechanisms concerning a temporary income tax cut and property tax relief.

This change is expected to be enacted by a forthcoming bill at the statehouse. The legislature is set to wrap this year’s session May 11, so that bill must come soon.

Republican lawmakers have consistently opposed changes to the mechanism, arguing that it’s only fair that people who pay higher income taxes should get more money back than people with lower incomes.

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