Tax reform: It’s not just for IBM

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Tax reform: It’s not just for IBM

20% income deduction, more generous depreciations aid small businesses

Tax reform: It’s not just for IBM

Local business owners say Gallagher, not tax reform, is highest concern

If tax reform ideas could be swapped like players between the Colorado Rockies and the New York Yankees, Rod Barker, owner of the Strater Hotel, would be up for a blockbuster trade: He’d give up any benefits in the recently passed federal tax overhaul for repeal of the Gallagher Amendment to the Colorado Constitution.
“The thing I’d like to get rid of more than federal taxes is the Gallagher Amendment,” Barker said. “It amounts to a shift of taxes to a point where it doesn’t work anymore.”
The Gallagher Amendment shifts the property tax burden onto commercial property in the state and away from residential property.
Passed in 1982, the Gallagher Amendment came in response to homeowners’ concerns over rising residential property taxes. It passed overwhelmingly 66.5 percent to 34.5 percent.
Under its provisions, residential assessed property values can comprise no more than 45 percent of the state’s overall assessed property value.
But when there’s a boom in housing values, like the one occurring now on the Front Range, tied with a drop in business values, like the one recently experienced in the state’s natural gasfields and oilfields, the ratio is thrown out of whack, and that triggers a mandatory assessed valuation rate cut for homeowners under the Colorado Constitution.
When the amendment was first adopted, the assessment rate to value commercial property for property taxes was 29 percent. It is still 29 percent for commercial property.
In 1982, residential property was assessed at 21 percent for purposes of property taxation.
In 2017, residential property was assessed at only 7.2 percent for the purposes of paying property taxes, and it is set to go down to 6.11 percent in 2019.
The Strater’s property tax bill in 2016, the latest year available from the La Plata County Treasurer’s Office, was $55,428. The Strater’s property tax bill in 1994, the furthest back computer records go, was $29,440.
Jerry Zink, owner of StoneAge, a tool-making company in Durango, said Colorado is already a desirable place to live, and as one of the fastest growing states in the nation, with a high percentage of second-home owners, it makes little sense to subsidize the residential home market when government services such as utilities, police and schools are required to serve all the new homes principally sprouting on the Front Range.
“I just don’t think it makes sense to decrease the tax burden when it comes to all those new homes and all the government services they will require,” Zink said.

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