(Feb. 24) – A bill by Rep. Mike Foote, D-Lafayette, and Rep. Brittany Pettersen, D-Lakewood, to close offshore tax haven loopholes for big corporations passed the House Finance Committee this evening. The bill adds a question to the November ballot that asks the voters to close the loopholes and direct recovered funds to classrooms in Colorado.
HB16-1275 generates a statutory referred measure that, if approved by voters, would empower the Department of Revenue to create a list of tax haven countries and ensure that companies include income generated in those countries as taxable income. All revenue generated from the change will be invested directly in K-12 education. Fiscal analysts forecast this bill would increase Colorado revenues by up to $50 million in the first year and $70 million in years thereafter.
“Taxes are paid where profits are made,” said Rep. Foote. “It’s really that simple. Every business should play by the same rules. This bill will change that big corporations can skip out on taxes while small businesses pick up the tab.”
“We brought this bill because we believe that if you make money in Colorado, you should play by Colorado rules,” said Rep. Pettersen. “This bill ensures that we have a sustainable economy and an educated workforce.”
“I’m just a little old lady and I’ve paid my taxes for the past 54 years,” testified Longmont resident Patricia Davis. “Are we just to sit back and watch our infrastructure crumble and our schools diminish? Or should we do something about it?”
“I believe it is a fairness issue,” said Rhonda Peters, a Lakewood small business owner. “Also, as a parent I am well aware of the shortfall in funding for our schools. Because of the shortfall in revenue from this loophole, the burden falls on taxpayers like myself.”
If a business demonstrates that a subsidiary in a tax haven country is for legitimate business reasons, the policy can be waived for that subsidiary. HB16-1275 will not change the tax rate for any businesses in Colorado; it will increase the taxable income of just those companies that have subsidiaries in tax haven countries determined by DOR.
The 6-5 party line vote sends the bill to the House Appropriations Committee.