UPDATE: A reader writes in to point out that thanks to now-Congressman Cory Gardner an official study was done on the cost of the Bill Ritter property tax hike. Total cost over 10 years: $3.8 Billion! As the reader wrote: “you don’t suppose that higher property taxes might make a struggling family feel even more upside down when they know their home has lost value?”
It's a sign of the times. Colorado's deteriorating business-friendly environment takes another hit. First it was Chief Executive Magazine dropping Colorado from #8 to #12 in its list of best states for business, and now the Council on State Taxation (COST) has given Colorado a "D" on business property tax fairness in its recently released scorecard.
COST is a nonprofit organization that represents nearly 600 multi-state businesses and is regarded as one of the most influential groups in the country when it comes to state level tax policy. Their low ranking of Colorado is not helpful to a state struggling to get its economy back on track and attract businesses over other states with better tax structures.
Due to the Gallagher Amendment, approved by voters in 1982, businesses are required to pay 55% of total property tax revenue, putting an unfair burden on them. Due to this imbalance, and the fact that residential property values have risen at a faster rate than commercial property, businesses now pay a rate of 29% of the assessed value compared to 7.96% for residential properties. A mill levy is then multiplied by the taxable rate to get the total tax due.
Former Governor Bill Ritter infamously signed a mill levy freeze in 2007, blessed by the liberal Colorado Supreme Court in 2009, which had the direct effect of massively raising the total property tax bill for business and residential property owners alike, but with four times the impact on businesses. Such genius tax policy by Bill Ritter ended up hurting property owners at the same time when people were struggling to hold onto their homes and businesses were fighting to stay afloat.
Increasing costs on businesses who hire people when people are losing their jobs made a bad situation much worse.
And guess who was one of the leading boosters on Bill Ritter's illegal tax increase? Why, none other than state Senator and now CD4 Congressional candidate Brandon Shaffer. As with all of Ritter's rock headed big government schemes, Shaffer was a big cheerleader every step of the way, knowing that blind support of his Democratic Governor's policies was a necessary evil if he wanted to move up the line of Democratic politics.
He even bragged to the Denver Post that the Ritter tax hike wouldn't hurt Democrats at the polls.
The loss of the Democrat majority in the state House in 2010 proved that liberal lie wrong.
The COST scorecard highlights the negative consequences bad tax policy has on the ability to bring businesses, and thus jobs, to Colorado. A recent FOX Business report highlighted the fact that since 2006 property values nationally are down 18%, but property tax bills are up 7%. In Colorado, that's even worse for business owners. Four times worse in fact.
One place where Colorado did get a good score was in its standard property tax procedures, receiving an "A," for things such as regular property tax assessments. That's a good thing, as the National Union of Taxpayers estimates that 60% of properties are over-valued in tax assessments.
Tax structures have a clear and direct impact on the employment environment, as an independent study on the devastating employment effects of the Rollie Heath tax hike spelled out. As Rollie's tax hike is likely to fail to even make the ballot, Coloradans will not have to worry about defeating another failed fiscal idea from the Democrats in Colorado. But scorecards like this, and the blowback Bill Ritter saw, should give Democrats pause when it comes to hiking property taxes and their effect on job creation.
You can find the full COST scorecard here.