Colorado is a step closer to giving low-income families some guaranteed tax breaks. With less than two days left in the legislative session, it’s far from a done deal.
The Colorado House gave final approval Monday to a state Earned Income Tax Credit. The credit would be made permanent whenever the state has enough of a budget surplus to trigger a refund under Colorado’s Taxpayers Bill of Rights (TABOR).
A Child Tax Credit would kick in if Congress decides that Internet purchases should be taxed, which would give the state enough money for that credit.
Ali Mickelson with the Colorado Fiscal Institute tells Colorado News Connection that neither tax credit is a sure thing at the moment, but the plan has been in the works for a decade.
"It’s such a timely bill for Colorado," Mickelson says. "And as families are starting to recover, the economy is starting to recover, this is the type of tax policy that is effective and important in moving families out of poverty, into the workforce."
Both credits are meant to keep a few thousand more dollars in the pockets of up to 400,000 low-wage working families in Colorado. Mickelson says that can be enough to lift a family over the federal poverty line.
The bill has bipartisan support, but also has drawn opposition from both sides who say it would deplete the general fund, potentially taking away money from K-12 and higher education.
In the past, Colorado has had an Earned Income Tax Credit and a Child Tax Credit. Both had been set up as TABOR refund mechanisms, so families weren't able to count on them. The Child Tax Credit was eliminated altogether in 2010.
The bill [.pdf], SB- 1, was designed to make both credits permanent. The bill now goes back to the Senate for a final look.
