Polis taketh away tax credits — and giveth to others | Opinion

On Monday, Independence Institute, where I serve as the director of the Fiscal Policy Center, published my latest report, which reveals that Gov. Jared Polis broke an important campaign pledge to reduce special-interest tax benefits. In fact, the report demonstrates that he increased such benefits by $640 million over 10 years.

In a comment responding to Colorado Politics’ coverage, Polis’s campaign called it a “bogus report.” Similarly, to discredit the report, a spokesperson for the governor’s office called the non-partisan, not-for-profit organization for which I work a “wildly partisan group.”

Notably, while serving on the Colorado State Board of Education, Polis wrote an 18-page report for Independence Institute entitled “Privatizing and Eliminating the Monopoly of the United States Postal Service.” I wonder why he would write a report for such a wildly partisan organization that is known for putting out bogus reports?

Under the circumstances, however, I understand their strategy. My detailed 66-page report is accurate and fully sourced. It relies entirely on official state documents to back up every claim. That makes it rather difficult to refute on its merits. So, they attempted to smear us instead.

The governor’s office went on to defend Polis’s record by highlighting tax benefits he reduced or eliminated — all of which the report credits him for.

His office then criticized the report for listing tax credits for child-care centers and expenses as special-interest tax benefits. Good or bad, that is exactly what they are. The report is clear that it does not attempt to evaluate the merits of his policies but only identifies changes to tax benefits and their effects.

Rather than attempting baselessly to discredit a credible report, Polis should focus on defending his record against his rhetoric.

In a December 2019 op-ed, Polis reminded Coloradans of his campaign platform for tax reform: “last year I called for a revenue neutral tax reform proposal that would have eliminated deductions and loopholes that benefit special interests in order to cut taxes for all.”

To determine whether he did this, my policy center looked at every piece of legislation Polis signed into law during his first term that eliminated, reduced, created, or increased tax benefits in Colorado. Using Legislative Council Staff (LCS) fiscal notes for each bill, we found that his policies will reduce such benefits by an estimated $3.86 billion over 10 years. But they will also increase them by $4.5 billion for a net increase of about $640 million in special-interest tax benefits over 10 years.

Rather than reducing special-interest tax benefits as promised, Polis simply took tax benefits away from certain groups and gave even more away to others.

He did not “cut taxes for all,” either. Sure, he reduced them for some — like childcare centers — by awarding new tax benefits. But he remained silent while his party killed five separate bills in the legislature that would have reduced income tax rates for everyone. Meanwhile, citizens reduced their own taxes with Proposition 116 in 2020 and are poised to do so again with Proposition 121 this year.

If Polis believes doing the exact opposite of what he promised voters was good for Colorado, he should say that and explain why.

Here’s some of what he did:

• He extended the electric-vehicle tax credit — a benefit which goes almost exclusively to higher earners.
• As the governor’s office told Colorado Politics, he reduced the state’s severance tax deduction for oil and gas operators. He also made changes to the oil and gas ad valorem tax credit, which LCS estimates could increase the credit by up to $14.7 million per year.
• At the state level, he repealed tax benefits that Congress gave small businesses as part of the CARES Act to help them bridge the gap while governors like Polis forbade them from operating. He used the extra revenue to extend the child tax credit and earned-income tax credit to undocumented persons.
• He created multiple credits and exemptions for homeowners whose homes use “decarbonizing building materials,” energy efficient heat pumps and residential energy storage systems. Those wealthy enough to both own a home and install a Tesla Powerwall will benefit.
• He created a tax credit for businesses that provide their employees with alternative transportation like electric scooters and bikes.

Every time the state hands out tax benefits to specific groups, it reduces state tax revenue and thus TABOR refunds for everyone else. LCS currently projects four consecutive years of TABOR refunds. That means not only did Polis increase special-interest tax benefits after pledging to reduce them, but the effect of those changes was also to reduce TABOR refunds — an effective tax increase — for everyone else by about $211 million during those four years.

It’s no wonder Polis’s campaign and the governor’s office spokesperson both attempted to discredit the report. It shows his record, and his record is damning.

Ben Murrey serves as director of the Fiscal Policy Center at the Independence Institute in Denver.