Ritter proposes corporate tax cuts

Plan would roll back business personal property charge

David Milstead, Rocky Mountain News

Wednesday, September 26, 2007

Gov. Bill Ritter had a rocky first year with the state's business community thanks to his tacit approval of a bill that expanded union power. When he unexpectedly vetoed it instead, business cheered.

Tuesday, he stood side by side with leaders of the Denver Metro Chamber of Commerce, announcing an economic development agenda heavy on corporate tax cuts and simplification.

A key portion of the plan: a rollback of the state's business personal property tax, an element of Colorado's fiscal policy that has vexed business for years. Colorado has one of the heavier tax burdens on the things business needs to do business, like desks, computers and manufacturing equipment.

That tax "has been the bête noire, the thorn in the side in this economy and our entrepreneurs," said Joe Blake, president of the Denver chamber, using the French term for black beast.

The rollback proposed by Ritter falls short of a full repeal of the tax, something that would benefit major companies such as Coors Brewing and Kodak, which has a plant in Windsor.

Instead, the plan is to gradually raise the threshold for who must pay. Currently, the tax must be paid if a company owes $2,500 or more, and all companies must file a return. Ritter proposes raising the threshold to $7,000 in five years and eliminating returns for companies that do not owe.

Blake estimated 80 percent of Colorado businesses ultimately will be exempt. Don Elliman, the state's economic-development director, estimates the change will cost the state $680,000 annually.

A similar bipartisan plan, not pushed by Ritter, died last year in the Democratic-led Senate. Ritter said he has talked to Senate leadership about supporting the bill.

The full agenda, which Ritter said "will give businesses the tools to compete, from a reduced tax burden to less red tape," also includes:

• Eliminating a "fly away" tax that charges sales tax on airplanes manufactured in Colorado but sold to residents of other states or countries.

• Simplifying corporate income tax so that all companies pay a single percentage of income. Currently, companies that do business outside Colorado must navigate through a series of calculations similar to those for an individual who owes federal alternative minimum tax.

• An annual $3.5 million bioscience-life science fund that will help transfer university-developed technologies to the private sector and provide incentives for companies to relocate to Colorado.

Ritter also suggested making it easier for rural small businesses to qualify for job-creation incentives from the Performance-Based Incentives Fund, devoting a portion of a clean-energy fund to economic development purposes and "looking for new strategies" in tourism.

Blake said the program "will make Colorado a much more competitive state, not just in the mountain region. . . . It's a great step forward for Colorado's economy."

Republican lawmakers called Ritter's business package a diversionary tactic to make it easier for the business community to swallow "the largest property tax increase in a decade" as result of Ritter's new property tax law.

"The effect of his pro-business package will be the same as a fly hitting a 747," said Rep. Cory Gardner, R-Yuma. "This is nothing more than a spoonful of sugar to help the medicine go down."

Ritter's plan at a glance

Lure new businesses to Colorado by slashing taxes, cutting red tape and concentrating on such 21st century technology as bioscience, aerospace and renewable energy.

Finance Editor David Milstead can be reached at milstead@RockyMountainNews.com or 303-954-2648. April Washington contributed to this report.