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September 11, 2005

The "Truth" About TABOR

Colorado will consider a major tax increase this fall, loosening the tight taxing and spending restrictions known as the TAxpayers' Bill Of Rights, or TABOR. Some of the money raised in Referendum C will be earmarked for roads in Referenum D. As part of its attempt to influence - er, inform - the public, the Denver Post today ran the first of a four-part series, "The Truth About TABOR."

If only.

This fall, Coloradans will choose whether to give up about $500 each in tax refunds over the next five years so the state has more money for roads, schools and health care.

Under TABOR, growth in state spending is limited to population + inflation. Any money raised beyond that must be refunded to taxpayers. Each year uses last year as its baseline, meaning that should revenue fall as a result of a downturn, there's a permanent reduction in tax rates as a percentage of state GDP.

Referendum C would suspend those refunds for 5 years, and eliminate that "ratchet" effect. It is estimates that this would raise $3.7B over 5 years. Referendum D would earmark $2.1B for roads, school buildings, and police and firemen's pensions.

Referendum C says nothing about where the money goes. The legislature will be free to spend it however it likes. Should C pass and D fail, the legislature would have all $3.7B at its disposal.

But while the article eventually describes what D does, the lead and the article leave the impression that the legislature would be required to spend the money on "roads, schools, and healthcare." This constitutes a lie, at least a lie of omission.

As for that $500 number, if it seems a little low to you, you're not alone.

To provide that money to the state, the average taxpayer would give up a total $491 in tax rebates over five years, according to estimates by the nonpartisan staff of the state legislature.

Those rebates are separate from state income tax refunds.

Opponents of Referendums C and D argue with the staff estimates on how much taxpayers would lose in TABOR refunds.

They divide the amount of forfeited tax refunds by the number of families to conclude that the average family would give up $3,200 over the five years.

This is not the difference between saying, "the average taxpayer" and, "the average of taxpayers." In fact, most of TABOR's rebate gets swallowed up by a variety of special rebates, refunds, and programs. (See page 10.) These are all discretionary, and it would appear that they would not retain their funding under C. Therefore, while the amount that taxpayers would have to give back from rebates is probably around $491, the actual amount of the tax increase is closer to $3200 per family. Moreover, since families (including some middle-class families) also benefit from many of the refund methods, that money should be included in the amount they're being asked to forgo.

None of this is explained anywhere in the article.

Finally, the article gives short shrift to alternatives. It mentions Joe Stengel's idea of selling off some state assets, but that's only a one-time fix. Those assets could also be leased, providing a revenue stream. Amendment 23 could be changed, and the state could apply for Medicaid waivers, releasing some of the pressure from the two biggest budget line items. None of this is suggested as an alternative.

In the end, the article accepts uncritically C&D's proponents' estimates of the cost to families, assumes that the money will go to certain programs, fails to mention alternatives. Even the headline focuses attention on TABOR as the main culprit, rather than a combination of budget decisions and priorities.

We'll see what the next three articles bring.

Cross-Posted at Oh That Liberal Media, and Newsbusters.

Posted by joshuasharf at September 11, 2005 11:00 PM | TrackBack

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