Tax haven bill dies in Colorado Senate
A bill that would have allowed voters to close a tax loophole allowing some of Colorado’s largest companies to hold revenue offshore and avoid paying state income tax died in the Colorado Senate, after being approved by the Colorado House earlier this month.
It is the second year in a row the measure, House Bill 16-1275, was defeated after encountering stiff opposition from the business community, including the Colorado Association of Commerce and Industry and such local groups as the Longmont Area Chamber of Commerce, who said it unfairly characterized some countries for their approach to taxation, creating a sort of corporate blacklist.
If approved, the measure would have gone before voters in the fall for approval, but it died in the Senate late Monday.
Sen. Matt Jones, D-Louisville, senate sponsor, said he was disappointed in the outcome.
“There was a serious misconception about the bill,” Jones said in an emailed statement. “This bill was meant to protect the integrity of our state’s business-friendly climate. I am just disappointed my colleagues voted with the big corporations that use these loopholes, and not the hundreds of thousands of Colorado small businesses that play by the rules.”
Rep. Mike Foote, D-Lafayette, who has sponsored the measure both years in the house, said he plans to continue work on the proposal and will run another bill next year.
Because companies aren’t always required to report how much revenue is being held in foreign countries, it’s difficult to estimate how much cash is at stake in this battle.
Last year, Colorado calculated potential tax collections of $97.1 million, based on revenue that Montana has collected since 2003, when it became one of the first states in the country to require companies to report foreign earnings.
Today, five states and the District of Columbia have a similar requirement, according to the Denver-based National Conference of State Legislatures — Alaska, Montana, Oregon, Rhode Island and West Virginia.
But Kyle Snyder, chairman of the board of the Longmont Area Chamber of Commerce, said the bill constituted government over-reach, and that the calculations used to determine how much funding it would generate in newly collected tax revenues weren’t well thought out.
“No one thinks its OK to shelter revenue abroad,” Snyder said. “But this did not seem like a good enough solution. People think that the idea of collecting taxes due is a good thing. But this mechanism seemed to fail the test of reasonability.”
