Capitol Gains: Sophie’s No-Brainer
I often joke that picking the worst bill of the session is like choosing between my children, but, so far this year, Senate Bill 130 has to be my favorite.
SB 130 is a bill that will ban the Department of Revenue from collecting use tax on income tax forms, as the agency began doing this year. It will also prohibit the department from auditing use tax collected. From my point of view, this bill basically ensures the state collections agency can’t do its job, while pardoning intentional tax dodging and making it more difficult for Colorado taxpayers to comply with the law. A real trifecta of bad policy, if you will.
To provide a little background, taxpayers are required to pay use tax when sales taxes aren’t collected by a retailer on their behalf. That has been the requirement since the sales and use tax was enacted in 1937, but often people are unaware of this responsibility. With the rapid increase in internet purchases, the use tax requirement has become more prominent, as consumers technically owe use tax on internet purchases from companies (Overstock.com, EBay, and formerly Amazon, for example) that don’t collect sales tax in Colorado.
The Department of Revenue has finally made it easier to comply with the requirement by adding a line on the Colorado income tax form for the calculation and remittal of use taxes. This is a simple and convenient way to pay use taxes that will likely result in an increase in compliance, and thus state revenue. Yet, SB 130 forbids the DOR from including this line on the tax form and from auditing use taxes collected.
As an analogy, say I have a fire hydrant by my house, and I am having difficulty determining how close I can park without encroaching into a no-parking zone. Then CDOT comes along and paints the no-parking zone red, making it easier for me to see the no-parking zone. If the reasoning behind this bill stands, instead of no longer parking in the no-parking zone that I can now see, I should instead park in the zone and then ban CDOT from painting no parking zones red and giving me tickets when I park illegally.
Craziness.
Or say there is a school zone you drive through on the way to work, however there’s no sign alerting you where the school zone begins. Then CDOT comes along and adds a flashing school zone sign so you can now see where you should slow down to be more aware that children are present. Using this bill’s logic, though, not only would you not slow down, you would ban school zone signs and forbid the police from giving tickets for speeding through the area.
Just to add insult to injury, SB 130 also reduces revenue by $2 million by increasing the number of taxpayers in noncompliance with the law. That just seems like the most backwards use of tax dollars.
My favorite child has now passed Senate Finance and is headed to Senate Appropriations.
