After missing out on testifying during the first (and very extended) day of hearings on the “Dirty Dozen” tax increase bills on Wednesday/Thursday and being repeatedly interrupted and ultimately gaveled down when offering opposition testimony earlier in the morning, Clear The Bench Colorado Director Matt Arnold was finally allowed to testify in opposition to one of the final bills under consideration (House Bill 10-1199: Net Operating Loss Deduction (Ferrandino/Heath) - Limits net operating losses to $250,000 for the next three years) at nearly high noon (appropriately?) on Friday.
Following the previous experience of repeated interruptions, Director Arnold spent some time before returning to the witness chair in writing up some prepared remarks, which follow:
I rise again in opposition to yet another unconstitutional stealth tax increase under consideration by this committee.
I will not appeal to your civility - by your conduct and demeanor, it is apparent that you have none.
I will not appeal to your respect for the Colorado Constitution and your oath of office - it is apparent that you have none.
I will not appeal to your sense of shame - again, it is clear that you have none.
I will address the specifics of this particular bill - and the inevitable impacts to business that will result, as well as the clear violations of the Colorado Constitution (Article X, Section 20 - TABOR).
There can be no question but that this bill represents “a tax policy change… resulting in a net revenue gain” and therefore, under the Colorado Constitution, requires a vote of the people.
I am acutely aware of the anti-constitutional ruling of the Colorado Supreme Court in the “Mill Levy Tax Freeze” case that put these tax credits & exemptions on the chopping block, and the interpretation of that language that some among you feel justifies this stealth attempt at increasing the tax burden on Colorado citizens and businesses.
Subsection (4)(a) [the requirement that tax increases receive prior approval by a vote of the people] must be read in conjunction with the other provisions of article X, section 20; specifically, the subsection (7) revenue limits. When read together, it becomes apparent that a “tax policy change directly causing a net tax revenue gain to any district” only requires advance voter approval when the gain exceeds one of the subsection (7) revenue limits. …
To avoid such a result, we find that a “tax policy change directly causing a net tax revenue gain” only requires voter approval when the revenue gain exceeds the limits dictated by subsection (7).
Even under this dubious interpretation, this particular bill - because it imposes additional tax increases that will fall AFTER suspension of the subsection (7) limits due to Referendum C EXPIRE - is an even more clear violation of the Taxpayer’s Bill of Rights.
39-22-504. Net operating losses. (6) (a) NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION, THE MAXIMUM AMOUNT OF NET OPERATING LOSS THAT A CORPORATION MAY SUBTRACT FROM FEDERAL TAXABLE INCOME PURSUANT TO SECTION 39-22-304 (3) (g) FOR A TAX YEAR COMMENCING ON OR AFTER JANUARY 1, 2011, BUT PRIOR TO JANUARY 1, 2014, IS TWO HUNDRED FIFTY THOUSAND DOLLARS.
For that reason, you are failing in your fiduciary duty to the citizens of Colorado by attempting to pass legislation that cannot pass Constitutional muster, and WILL fall to the inevitable legal challenge - even under the expansive definitions adopted by the current Colorado Supreme Court majority.
On the business front - this bill unfairly penalizes those businesses who have toughed out the worst hits just when they might be getting on the path to recovery. Adding additional tax burdens on businesses struggling to escape bad years will RETARD any incipient recovery, delaying their ability to create jobs and generate revenue (which will have a net negative effect on revenues for the state).
Playing semantic games about “repealing” vs. “deferring” the tax credit is disingenuous - forcing businesses to provide the government an interest-free loan is a tax by any other name - and smells just as rank.
Pretending that not having funds available NOW - opportunity costs - does not impact business is either disingenuous or shockingly ignorant of economic facts.
Businesses also rely on a certain amount of regulatory stability and generally on the rule of law - changing the rules in the middle of the game decreases investment and willingness to take risk.
This bill will not only damage businesses, but also violate the constitutional rights of Colorado citizens to exercise prior approval on tax increases.
Following my testimony, the committee members weighed in with their own statements and comments. Rep. Cheri Gerou (R-HD35) graciously apologized on behalf of the committee for the chair’s earlier abusive conduct. Rep. Daniel Kagan (D-HD3 by way of Great Britain) rebuked criticism of the bill on constitutional grounds and continued by lecturing on the Constitution - all while insisting “I will not enter into a debate on the Constitution” (of course not; lecturing from the rostrum is much more his style). [Interestingly enough, Rep. Kagan - who's income is derived exclusively from overseas business holdings, presumably NOT subject to the tax increases he is proposing - seems to have a unique perspective on public-private sector relations]:
“We are operating as a collective… to provide supports to the private sector.” ”We cannot provide them without some money - we just need a ’small slice’ of everyone’s money to provide these service. We’re in a joint venture to ensure that industry thrives.”
Rep. Judd, although on greatly improved behavior, could not seem to stop himself from interrupting on several occasions - including one in which he stated that he “would not stand… for interruptions.” (Seems to be lacking the irony gene).
At least this time, testimony was not “gaveled closed” prior to completion.
Don’t let YOUR voice be “gaveled down” this November - you CAN exercise YOUR right to vote “NO” on the four ‘unjust justices’ of the Mullarkey Majority (Michael Bender, Alex Martinez, Nancy Rice, and Chief Justice Mary Mullarkey) who need YOUR approval to continue taking away your constitutional rights: your right to vote on tax increases, your right to defend your homes and business from seizure by rapacious governments, and your right to enjoy the benefits of the rule of law, instead of rule by an oligarchy of activist, agenda-driven “justices.” Help to Support Clear The Bench Colorado with your comments (Sound Off!), your contributions, and your “NO” vote on retaining these unjust justices!