OUR VIEW

0 Comments | Gazette, The (Colorado Springs), Feb 25, 2008

First steps

Legislature moves toward better tax policy

Believe it or not, there are things going on in the Colorado General Assembly other than the controversies swirling around Rep. Douglas Bruce. One of the best bills making its way through the Legislature, HB1225, would reduce the business personal property tax for many of the state's small businesses. Introduced by Democratic Reps. Joe Rice of Littleton and Bernie Buescher of Grand Junction, the bill was approved unanimously last week by the House Finance Committee and now moves to the House Appropriations Committee.

A similar bill from Rice passed the House during last year's session, but was killed quickly once it went to the Senate. HB1225 is not expected to suffer a similar fate. According to a news report in Wednesday's Gazette, the bill faces little opposition in the Legislature because it is part of Gov. Bill Ritter's economic development package. Senate President Peter Groff noted the position of the Senate has changed from last year.

HB1225 would raise the tax exemption on business personal property -- everything from manufacturing equipment to file cabinets -- from the current $2,500 to $7,000 by 2011. Bill supporters argue the tax hits small businesses especially hard because owners sometimes spend days wading through the complicated tax formula to find they owe maybe $100. That's a lot of lost productivity for little benefit to the state, so lawmakers are taking steps to change the system.

HB1225 phases in the exemptions over several years to allow governments to adjust budgets to the reduction in revenue. As many as 30,600 businesses would eventually be completely exempt from the tax by 2011.

"This will help our businesses be a little bit more productive," said Rice. We have to agree. Taxes tend to limit productivity across all sectors of the economy, and are especially hard on small businesses. Sheldon Richman of the Foundation for Economic Education told a gathering at the Cheyenne Mountain Conference Center on Wednesday that the heads of large companies simply hand the tax laws to their accounting departments to decipher and pay, but small companies don't have that luxury. The accounting department is usually the owner, puzzling over Byzantine regulations at his kitchen table after closing time. HB1225 would alleviate some of that and allow small-business owners to focus more on their businesses and less on burdensome regulations.

Committee member Bruce suggested the bill should be expanded to exempt the first $7,000 of every company's tax liability, thus giving a boost to all Colorado businesses. Rice said that will be addressed in future legislation, along with other changes, but he wanted this effort to be simple enough all sides could agree on it. Although we agree with Bruce that the exemptions should cover all businesses, we also see the wisdom of Rice's approach. Small steps in the right direction are better than no steps at all, or worse, steps in the wrong direction.

If only Denver were Las Vegas

We sometimes wish that what happens under the Capitol dome would stay under the Capitol dome. There's usually no shortage of proposals that don't make it out of committee, some good, some bad. Unfortunately, many bad ones actually become law because some lawmakers can't resist proposals that look good, but don't really change anything. SB88 is such a bill.

Introduced by Sen. Ron Tupa of Boulder, the bill would make it illegal for minors to possess and use tobacco products. Under current law, it's illegal for minors to purchase tobacco products or for adults to give them smokes. Tupa's bill completes an outright ban on tobacco for minors -- they can't buy it and they can't posses it. So far, so good. Most minors are not able to make wise decisions about behaviors that affect their health, so adults must provide the guidance needed. That's usually their parents' responsibility, but sometimes the state steps in and gives them a hand. SB88 works to that end, right? Wrong.

The bill has no penalties for minors caught with tobacco, other than a provision that gives law enforcement officers the authority to confiscate the contraband. That's like having a rule in football that bans a pass receiver from running downfield before the ball is snapped, giving him a jump on the player covering him, but allowing any yardage gained if a team breaks the rule.

The only member of the state Senate who acted on what he saw as the futility of the bill was Dave Schultheis of Colorado Springs. Schultheis backed the bill originally, but changed his vote when penalty provisions were removed. "I'm not convinced the bill will reduce the number of kids smoking and I don't like passing laws I don't think will make a difference," Schultheis told The Gazette.

We're not arguing for locking up kids caught with a pack of Marlboros, but it seems logical that any ban that seeks to change behavior has to come with penalties for breaking that law. Such penalties should be progressive, with more serious consequences for serial offenders.