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Colorado

Tesla Roadster Again Controversial (and this time, it has nothing to do with Jeremy Clarkson)

October 24, 2009 · 3 comments

Tesla Motors LA Flagship Store Launch

When Top Gear’s Jeremy Clarkson reviewed the electric sports car Tesla Roadster, he had plenty to say. Notably, he complained about the price, which was at the time of filming in the UK, £92,000 (about $150,962.40 US). Lucky for all of you prospective Tesla Roadster buyers, the price has dropped to a mere $109,000. And if you moved to Colorado, you could get your hands on it for a mere fraction of the price.

Colorado? Yeah, you read that right. Colorado is offering a 38% tax credit on the Roadster through the end of the year. That brings the total cost of the Roadster to about $65,000.

It’s not just the Tesla that can take advantage of the credit. It applies to your run of the mill Prius, too. In fact, Colorado is ahead of the pack when it comes to providing tax breaks for hybrid and zero-emission vehicles. The state has been doing it for years.

But it’s the size of the Tesla refund that is attracting attention.

Bowing to pressure from overextended taxpayers, state lawmakers passed a bill which would cap such refunds at $6,000. The bill, however, doesn’t take effect until next year. That means that there’s still plenty of time to take advantage of the refund this year.

Though state lawmakers didn’t expect to see more than 10 Tesla refunds, one Tesla dealership has reported selling six cars this week alone. That’s about $252,000 in refunds in one week. That’s not a pace that taxpayers are happy to see when faced with a $320 million deficit in the state budget.

Of course, there are some restrictions on the refund. For one, to qualify, the vehicle must be titled and registered in Colorado. And the credit is only available in the year that the car was purchased.

However, since it’s a tax credit (and not a flat out dollars back refund), there is a chance that the amount of the credit could exceed a taxpayer’s net tax liability for the year. If that happens, any excess credit may be carried forward and claimed on future year returns for up to five years.

So, it may not turn out be the kind of hit that taxpayers fear. That still doesn’t make taxpayers feel better about what’s perceived as an irresponsible tax policy. The amount of the refund alone, it has been noted, is more than many taxpayers will pay for the total cost of their car. In a tight economy, this isn’t the kind of thing that sits well with many folks.

What do you think? Fair game or bad policy?

And if you’re interested, you can watch the controversial “Top Gear” review of the Tesla Roadster here:

(In case you missed the scandal, the BBC later admitted that the scene of the car being pushed into the garage was not a result of the alleged 55 mile fail.)

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State Tax Primer from A to W: Colorado

May 18, 2009 · 4 comments

Welcome to my sixth in a series on state taxes! For information about what I’m trying to do, read my introductory bit. Next on the agenda, Colorado.

COLORADO

Population: 4,939,456 (22nd)

Capital: Denver

Largest City: Denver

Gross Domestic Product: $236 billion

GDP per capita: $40,963 (10th)

2008 election winner: Barack Obama

web site: http://www.colorado.gov/

Income Tax

Colorado does collect personal income tax. Taxes are a flat 4.63% of your federal taxable income, regardless of income level.

Colorado taxpayers must generally file an income tax return if they lived or worked in Colorado for part or all of the year.

Your filing status for Colorado purposes is the same as your federal filing status. If you file a joint federal return, you must file a joint Colorado return even if one spouse is not a Colorado resident.

Some special exemptions and incentives apply to taxpayers. For taxpayers receiving a pension, the first $20,000 (for persons 55 to 64 years of age) or the first $24,000 (for persons 65 years of age or older) of pension income is not taxed.

For families, payments or contributions made to qualified state tuition savings programs (529 programs) may be subtracted from taxable income. Additionally, taxpayers with federal adjusted gross income of $60,000 (in some cases $64,000) or less may claim a Colorado child care credit in addition to the federal child care credit.

The one “complicating” factor is the extensive system of credits. Colorado offers an additional 13 credits on personal income tax returns, including:

  • Plastic recycling investment credi
  • Colorado minimum tax credit
  • Historic property preservation credit
  • Child care center investment credit
  • Employer child care facility investment credit
  • School-to-career investment credit
  • Colorado works program credit
  • Child care contribution credit
  • Rural technology enterprise zone credit
  • Long term care insurance credit
  • Contaminated land redevelopment credit
  • Low-income housing credit
  • Weather related livestock sale credit
  • Aircraft manufacturer new employee credit

Colorado does participate in the Treasury Set Off program. A Colorado state tax refund will be taken to satisfy any outstanding liabilities owed to Colorado or to the Internal Revenue Service; a federal refund will be taken for same.

Colorado has a pretty nifty charitable giving program. Referred to as Checkoff Colorado, the program – the first of its kind in the country – allows taxpayers to make a donation to one of a number of charities by ticking a box on the taxpayer’s income tax return.

Colorado also includes a Colorado Organ & Tissue Donor Registry Form in its tax return booklet. As this is something that I feel very strongly about, I am pleased to see it.

Sales Tax.

Colorado imposes a state sales tax of 2.9% on any item priced at more than 17 cents. The total tax rate may be higher, depending on the district and local taxes that apply.

Sales tax is imposed on most retail goods and some services. In order to assist businesses and tax professionals with compliance issues, the Colorado Department of Revenue offers a series of free classes held throughout the Metro Denver Area, Colorado Springs, Fort Collins, Grand Junction and Pueblo. For those that cannot attend, there’s an online version of each class – that is service!

Tobacco Tax

Colorado’s cigarette tax is 84 cents per pack pack, currently the 32nd highest in the country. The national average now stands at $1.23.

There is also a tax on other tobacco products of 40% of the manufacturer’s list price.

In Colorado, the cigarette excise tax revenue is used to fund tobacco control programs – one of 12 states in the country to do so.

Gas Tax

The gas tax rate in Colorado is $.22 per gallon, making it the 33rd most expensive state in which to buy gas.

Property Taxes

Colorado does impose taxes on real property based on the assessed value of the property. Property tax calculations are determined by taking into consideration the actual value of the property; property classification; assessment rate; assessed value; and tax rate.

Seniors may be exempt from certain real property taxes. In addition, eligible taxpayers may receive a Property Tax/Rent/Heat Rebate. The program provides a rebate of property taxes and heating expenses to low income elderly and disabled individuals who reside in Colorado.

Colorado also imposes a tax on personal property according to the type of property and assessment value.

Inheritance and Estate Tax

Colorado does not impose an inheritance tax or a gift tax. Like most states, Colorado no longer has an estate tax since it was tied to the federal estate tax state death tax credit.

Overall Tax Burden

The overall tax burden in Colorado, taking into account taxes paid by individuals, results in a ranking as 34th most-tax burdened state in the country, according to Tax Foundation. Colorado has never been higher than 34th since the rankings were established.

taxgirl says

Colorado does a lot of things right. I have to say, I was really impressed by their state revenue department web site – so many of them are really terrible. It’s almost as if (gasp) the Colorado DOR wants you to understand your tax bill.

The relatively low tax burden ranking makes sense. Colorado bases their income tax on the federal income tax with few “add ons” and deductions that aren’t state tax incentive related. Keeping it simple helps.

Along those lines, while I’m generally not a pure flat tax fan, Colorado comes pretty close to getting it right. The state taxes earned and unearned income (the pure flat tax system would only tax earned income – that means the folks who work for wages could end up paying more than Warren Buffet by the dollar, not by percent). The rate is relatively low and by basing the rate on the federal income tax system which already takes exemptions and deductions into account, there is little additional need for more exemptions and deductions.

The exception to the “simple” rule is the series of personal tax credits available to personal taxpayers. Those credits constitute 13 lines of what is basically a 45 line tax return. Additionally, most of them are clearly behavior-related.

With respect to American Recovery and Reinvestment Act (Recovery Act) dollars, Colorado is near the middle of the pack in terms of funding allocations. The state will receive $1,587,564,761 from ARRA with the biggest chunk going to the State Fiscal Stabilization Fund.

The economy remains strong, despite the recession. Colorado home prices, modest to begin with, are expected to show a slight gain of 1% – a good sign in comparison to its neighbors to the west. Total personal income is expected to rise 2.7% in 2009, according to Patty Silverstein, president of Development Research Partners in Littleton and chief economist for the Metro Denver Economic Development Corp. In the 3rd quarter of 2008, Colorado’s personal income growth was the fourth fastest-growing in the nation.

I don’t believe in straight line statistics, or the idea that X equals Y. So I’m not going to buy into the idea that Colorado’s lower tax burden is solely responsible for its continued solid economy. There are clearly other factors in play. But you have to give it some serious consideration. Sure, Colorado has well-to-do individuals that can afford to pay more but so does California and look where that’s gotten them.

A great example of the differences between Colorado and other states can be seen with respect to beer taxes (yes, beer taxes – I was researching this recently for a piece in the Legal Intelligencer). As the “home of the Rockies” and a certain major brewer (whose name I cannot utter lest my husband never forgive me), Colorado could afford to raise the excise taxes on beer. Americans tend to support those kind of increases, as opposed to income taxes. But instead of increasing taxes on beer, Colorado increased the opportunity to buy beer: they repealed the ban on selling beer on Sundays. The result? Increased excise tax revenue by more than 7%. No increased tax rates.

Thinking outside of the box is what we should demand of our lawmakers. It seems like, when it comes to taxes, Colorado is moving in the right direction.

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(Note: tax rates were current as of 05-18-2009 and were taken from the CO Department of Revenue)

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Election Results: State Tax Legislation

November 5, 2008 · 3 comments

It was a historic day on yesterday with the election of President Elect Barack Obama. It’s almost easy to forget that there were other elections and ballot issues to consider but voters in some states faced a laundry list of issues. Among those were several state tax measures, including:

In Arkansas: Voters supported an amendment to the Arkansas Constitution which, among things, eliminated a reference to the poll tax.

In Colorado: Voters said no on several tax measures, including a state sales tax increase. Amendment 58, which would end a property tax credit for Colorado’s oil and gas industry and boost severance tax revenue by $321 million a year – seven companies, including Chevron and Conoco each contributed $1 million towards the opposition campaign. Severance taxes are imposed on minerals extracted from the state, or “severed,” to compensate for nonrenewable resources.

In Florida: Voters defeated Amendment 8, which would have authorized counties to ask voters if they want to increase the sales tax for up to five years to aid the local community college. Voters approved Amendment 4, which would give conserved property a lower tax assessment; the amendment also eliminates property taxes on lands placed in a perpetual conservation easement.

In Louisiana: Voters said no to a bill that would dedicate additional state severance taxes to parishes (like counties) of origin (See Colorado above).

In Maine: Voters approved a measure vetoing a new tax on beer, wine and soft drinks, which would help finance a state health care program.

In Massachusetts: Voters rejected another measure that would have cut, and then eliminated, the state’s personal income tax. A similar measure was rejected in 2002.

In North Dakota: Voters rejected an income tax cut. Measure 2 would have cut income taxes in half and corporate income taxes by 15%.

In Nevada: Voters shot down an attempt by the Nevada Legislature to amend or repeal the sales and use tax without voter approval.

In Oklahoma: Voters overwhelmingly approved an exemption from personal property tax for injured veterans and veterans’ surviving spouses. Voters also approved a measure that would require a person or business to file an application in order to receive a property tax exemption.

In Oregon: Voters said yes to an exemption that required 50% voter turnout to pass property tax increase measures. Voters turned down a measure that would have allowed federal taxes paid to be deducted from Oregon taxable income.

(Note: Findings were based on local newspaper and media reports. If you have additional information, please share!)

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