Guest Commentary published in The Pueblo Chieftain
By Sen. Josh Penry
With the start of 2010 we can’t help but feel a renewed sense of hope about the future. It’s hard to see how the New Year could be any rougher on Colorado taxpayers than 2009. Nevertheless, it is important to remember that our recovery is still in the early stages. It is fragile. The policies implemented moving forward can make or break Colorado’s chances of a sustainable economic recovery.
That is why we need policies that promote job creation and economic growth. Yet, Gov. Bill Ritter and legislative Democrats insist that raising taxes on employers and families is the best road to economic recovery. Last session, they passed more than $1 billion in taxes and fees. They even abolished a common-sense cap on government spending growth - evidently with an eye toward spending your tax dollars even faster if and when the economy recovers.
Rather than raising taxes during a recession, policymakers should work to implement meaningful and permanent spending reductions. In short, government needs to make the same kind of difficult choices that small businesses and families across the state are making every single day. After all, Colorado still faces a $600 million budget deficit for the current fiscal year and a $1.5 billion deficit for next fiscal year, which starts in July.
Unfortunately for taxpayers, the governor’s plan for 2010 looks a lot like his plan for 2009.
Not satisfied with $1 billion in tax and fee hikes approved last year, Mr. Ritter has proposed another $500 million in tax increases over the next two years. Some Democrats in the Legislature want to go even further, calling for more than $1 billion in tax hikes.
Never mind that moms and dads are still out of work. Never mind that unemployment is nearing double digits.
If the governor has his way, one of the victims of 2010’s tax hikes will be businesses that have created thousands of jobs in some unlikely places. These businesses are located in enterprise zones, which are established with the expressed purpose of promoting economic activity in economically distressed areas. These areas suffer from higher-than-average unemployment and lower-than-average per capita income.
Businesses that locate in enterprise zones benefit from certain tax breaks in exchange for creating jobs and boosting the local economy. Raising taxes on these businesses may give state politicians a few more dollars to spend this year, but it will do nothing to promote economic recovery. Worse, it will force businesses to delay pay raises, postpone hiring or even lay off workers to cover the cost of higher taxes.
Tax hikes also will hamper Colorado’s ability to compete in the global economy. Evraz Rocky Mountain Steel of Pueblo, for example, says it will not be able to provide the competitive pricing other companies receive outside the state if its taxes are raised.
Another one of the governor’s targets this year is the shopper who is smart enough to pinch pennies by shopping online. Currently, Internet retailers are not required to collect sales tax on purchases made by customers in states where the online sellers have no physical presence.
If online retailers are forced to collect sales tax from customers, as the governor would like, it could cause those businesses to effectively “lay off” its local affiliates. Such was the case with Amazon.com when states like North Carolina and Rhode Island implemented an online sales tax.
A tax increase that will put the Colorado affiliates of online retailers out business is bad economic policy. A tax increase that will raise the price of consumer goods at a time when families are struggling to get by is bad human policy.
Policymakers’ first rule of thumb during this recession should be to “do no harm.” That means opposing tax hikes and new regulations that would set the stage for more layoffs, push businesses to move to another state (or another country) or make companies think twice before relocating to our state.
Colorado is poised for a strong economic recovery, but it can’t happen if Democrats continue down the failed road of higher taxes and more fees.