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Small business group decries TABOR court ruling

Tony Gagliardi

Tony Gagliardi

Phil Castle, The Business Times

A small business advocacy group warns a court ruling threatens a constitutional right to vote on tax increases in Colorado.

The ultimate outcome of the litigation could be higher taxes imposed by a Colorado Legislature unchecked by constitutional limits or voters, said Tony Gagliardi, state director of the National Federation of Independent Business.

A three-member panel of the 10th U.S. Circuit Court of Appeals affirmed a lawsuit can proceed challenging the Taxpayer Bill of Rights, an amendment to the Colorado Constitution more commonly known as TABOR.

The ruling upheld a lower court ruling that denied a motion by Colorado Attorney General John Suthers to dismiss the case.

Suthers now has the option to appeal the latest ruling to the full 10th Circuit Court of Appeals or U.S. Supreme Court or allow the lawsuit to proceed.

The suit, brought against Colorado Gov. John Hickenlooper in May 2011, argues TABOR takes away the ability of state legislators to impose taxes, in turn violating a guarantee in the U.S. Constitution that every state offer a republican form of government.

A group that includes former and current state legislators filed the lawsuit.

Passed by voters in 1992 as an amendment to the Colorado Constitution, TABOR restricts increases in government  spending and tax collections to a formula that factors in population growth and inflation. Revenues that exceed the limit must be refunded. Proposed tax increases that exceed the formula require voter approval.

The NFIB Small Business Legal Center filed what’s known as a friend of the court brief against the lawsuit.

The concern if TABOR is ultimately struck down, Gagliardi said, is the potential for new and unchecked spending and tax increases.

While TABOR has been criticized for hampering the ability of the Legislature to deal with budget shortfalls during  times of economic downturns and declining revenues, Gagliardi said spending limits kept the shortfalls from being even worse.

Moreover, the Colorado Legislature established a precedent of ceding its taxing authority in referring to voters another constitutional amendment that requires business owners to pay more combined property taxes than homeowners, he added.

The ruling also has implications for other states with voter-enacted controls on spending and taxation, said Karen Harned, executive director of the NFIB Small Business Legal Center. “If TABOR is overturned, the 10th Circuit will have created a precedent that opens the door for a torrent of lawsuits throughout the country challenging taxpayer protections as well as any initiative or referendum.”

Phil Castle is editor of the Grand Valley Business Times, a twice-monthly business journal published in Grand Junction. Castle brings to his duties nearly 30 years of experience in editorial management positions with Western Colorado newspapers. In addition, his free-lance work has appeared in a variety of publications, including the Washington Post. He holds a bachelor's degree in technical journalism from Colorado State University.
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Posted by on Mar 12 2014. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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