Colorado Vote Proves TABOR Works

PORTLAND, ME – The Maine Heritage Policy Center today cited the Colorado voters’ approval to Referendum C as proof that the Taxpayer’s Bill of Rights (TABOR) is working as the authors intended.

“The Colorado vote is proof that TABOR works,” said Bill Becker, executive director of The Maine Heritage Policy Center. “TABOR allows the people paying the bills, not politicians, to have the final say in exceeding tax and spending limits.”

Colorado’s TABOR is a tax and expenditure limitation law that does not allow tax revenue to exceed the rate of annual population growth plus inflation. Tuesday’s vote for Referendum C exercised a provision within the TABOR law that allows voters to approve revenue increases beyond the allocated yearly growth. The passage of Referendum C is the first voter approval in the 13 years of TABOR’s existence to exceed the revenue limits. The vote does not authorize any new taxes beyond what is currently in place.

“Colorado voters said that in the event that the government has surplus tax revenue, they can spend that money,” said Mr. Becker. “Voters did not approve a tax increase and did nothing to undo a successful law.”

Since the passage of Colorado’s TABOR in 1992, the state has experience strong economic and population growth. The Tax Foundation ranks Colorado 44th highest in their annual state and local tax burden index, at a rate of 9.2 percent of every $1,000 of income. Maine currently ranks 1st in state and local tax burden, at a rate of 13 percent.(i) In another ranking, the Small Business Survival Index 2005, The Small Business and Economic Council ranks Colorado 10th while Maine ranks 49th in an index of friendliest to least friendly policy environments for entrepreneurship.(i)

“There is no doubt that over the 13 years that Colorado’s TABOR has been in place the law has allowed for economic growth, budget stability, and a lower tax burden. Let’s hope that if Mainers approve TABOR that the state will experiences these same benefits,” stated Mr. Becker.

A statutory Taxpayer’s Bill of Rights will likely be on the ballot in Maine in November 2006. The bill is an updated version of the Colorado law with corrections to the perceived flaws. One of the most notable changes is that 20 percent surplus revenue received above the spending limit would accrue in budget stabilization and emergency funds, and 80 percent would be returned to taxpayers. Also, the Maine TABOR limits government spending at the state and local levels, while the Colorado TABOR limits the government revenue growth.

The Maine Heritage Policy Center is a nonprofit, nonpartisan research and educational organization based in Portland, Maine. The Center formulates and promotes conservative public policies in the areas of tax and fiscal policy, health care, and education – providing solutions that will benefit all the people of Maine. Contributions to MHPC are tax deductible to the extent allowed by law.