Feb 13, 2024

An expert in policy advocacy and coalition building, Chaer has dedicated her career to helping people meet their basic needs and expanding economic opportunity. She serves on the executive committee of the All Families Deserve a Chance (AFDC) coalition. Staff page ›

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CCLP testifies in opposition of a state income tax reduction

by | Feb 13, 2024

On Monday, February 12, 2024, Chaer Robert, CCLP’s Emeritus Advisor provided testimony to the House Finance Committee against House Bill 24-1065, Reduction of State Income Taxes. CCLP is in opposition of HB24-1065.

 

Thank you, Mr. Chair and Members of the Committee. I’m Chaer Robert and I am representing the Colorado Center on Law and Policy. We stand with diverse communities across Colorado in the fight against poverty. 

Since the reductions in the State Income Tax Rate from 5% to 4.75% in 1999, I would constantly disagree with those who said, “an across-the-board income tax rate cut benefits everyone.” While rate reductions are more broad-based than many special interests tax breaks, those with income too low to owe income taxes benefit not at all. For example, a couple earning under $27,700 per year would not get any tax reduction, since their income is less than the standard deduction for 2023. In fact, they lose most of any TABOR rebate they would get if this bill passed, since the $1.3 billion in reduced state revenue would reduce the TABOR refunds by 73% for the next couple years. 

Our main TABOR refunds are rebated through income tax filing for ease of administration but represent both sales tax and income tax collections. According to the 2022 Department of Revenue Tax Profile & Expenditure Report, the lowest income Coloradans pay the highest percentage (7.6%) of their incomes in state taxes, while those earning above $200,000 per year pay the lowest percentage of their income (4.1%) in state taxes, primarily because of our higher sales tax and flat income tax rate. 

Does this bill help older Coloradans? Since those of us over the age of 65 get extra income tax breaks already, older adults are unlikely to get net benefit from the bill’s passage:

  1. Seniors have a higher standard deduction. If a couple is both 65 years and/or older, their 2023 standard deduction is $30,800 instead of $27,700. 
  2. Coloradans pay no income tax on any Social Security earnings, effective with House Bill 21-1311. 
  3. In Colorado, the first $24,000 of retirement income for each individual is not taxed. So, individuals can claim the greater of Social Security income or up to $24,000 each in overall retirement income. 

This means a couple that is both 65 years and/or older likely do not pay Colorado income taxes unless their income exceeds $78,700. For an individual filer over the age of 65, their income would need to exceed $37,850. For most seniors, the main impact of this bill would be a much smaller TABOR refund. 

Please oppose House Bill 24-1065. 

 

Sincerely, 

Chaer Robert 

Emeritus Advisor 

Colorado Center on Law and Policy 

 

Update 2/13/2024: SB24-064 failed House Finance Committee on February 12th and has been postponed indefinitely.

Recent articles

CCLP testifies in support of TANF grant rule change

CCLP's Emeritus Advisor, Chaer Robert, provided written testimony in support of the CDHS rule on the COLA increase for TANF recipients. If the rule is adopted, the cost of living increase would go into effect on July 1, 2024.

CCLP’s legislative watch for April 5, 2024

For the 2024 legislative session, CCLP is keeping its eye on bills focused on expanding access to justice, removing administrative burden, preserving affordable communities, advocating for progressive tax and wage policies, and reducing health care costs.

HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.