Democrats are excited to spread the word about a program they’re calling the “Colorado Cashback,” which is set to send income taxpayers checks of $750 starting in the coming weeks. The $3.5 billion will be returned to taxpayers in three ways.
Democrats are excited to spread the word about a program they’re calling the “Colorado Cashback,” which is set to send income taxpayers checks of $750 — joint filers will get $1,500 — starting in the coming weeks., including that the projected $2.74 billion they’ll use for these checks is part of a pool of money that the state Taxpayer’s Bill of Rights requires be refunded.
But there’s something else largely missing from the political messaging: In order to send checks in equal amounts to all qualifying taxpayers, the legislature has actually taken quite a bit of money away from higher-income taxpayers, transferring more of the windfall from historically flush state coffers over to poorer people.
The $3.5 billion will be returned to taxpayers in three ways: first, through one-time property tax relief for seniors and veterans; second, through a small, one-time cut to the state’s flat income tax rate; third, through the new and also one-time “cashback” program; and, finally, by running the money left over after the first three mechanisms through a six-tiered system that gives more money to higher earners and less to lower earners.
The first two mechanisms account for only a fraction of the state’s total TABOR refund obligation — the property tax relief is expected to cost about $161 million, while the temporary income tax cut will cover about $148 million. Had the Democrat-run legislature not passed Senate Bill 233 earlier this year, then there would be no “cashback” checks this year, and the vast majority of the billions that remained would be run through the six tiers.
In that alternate reality, the richest tier — that is, those earning at least $265,000 — would each get back about $2,000, plus whatever additional savings they might get from those first two mechanisms.Nonpartisan state budget staff has tallied this one-time rich-to-poor transfer of tax money as follows. This group comprises a plurality among the six tiers, as nonpartisan staff projects that about 35% of income taxpayers in Colorado earned under $47,000 last year.
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