Americans for Tax Reform (ATR), the powerhouse anti-tax organization, blasted Amendment 66 today for the harm it would do to Colorado’s over half million small businesses.
One of the underreported aspects to the billion dollar ballot measure is the different way it treats big corporations and small businesses. Under Amendment 66, the corporate tax rate for big business stays at 4.63%, but for small businesses – most of whom file as individuals – the tax rate will rise 27% to 5.9% for all income over $75,000.
A 27% tax increase is no small thing for the hundreds of thousands of small business owners in Colorado struggling to make it in this economy.
According to IRS data, 417,698 small businesses in Colorado filed under the individual income tax system in 2011 (the most recent year for which data is available). However, this figure only accounts for sole proprietors. When factoring in S-Corps & partnerships that also pay the individual income tax, an upwards of approximately 550,000 Colorado small businesses would see their taxes go up and their job-creating capacity significantly reduced if Amendment 66 is approved.
In light of this, it’s not surprising that a recent NFIB poll of Colorado small businesses found that 96 percent were opposed to Amendment 66. Tax Foundation economist Liz Malm explains how Amendment 66 would raise taxes on engine of economic growth and job creation in Colorado:
“A majority of firms within Colorado are what we call “pass-throughs” because their business income tax is ‘passed through’ to individual owner, rather than paid by the actual business entity itself. According to a 2011 Ernst and Young study, 95 percent of firms in Colorado are pass-throughs. Amendment 66 would raise taxes on all of them.”
This should bother conservatives and liberals like. Conservatives, because it’s a massive tax increase, and liberals because the drafters of the Amendment 66 gave short shrift to mom and pop shops while protecting big corporations.
There is something for everyone to hate about Amendment 66.