Small businesses are the backbone of Colorado’s economy, employing over 1 million people and making up 99% of all businesses. This community of entrepreneurs leads in innovation and job creation, and throughout the pandemic, they’ve had to quickly adapt to keep their businesses afloat.
Despite their tremendous contributions to Colorado’s economy, they’re often left behind by tax policies that favor large corporations.
The Tax Fairness for Coloradans bill package, passed by the state legislature, is an opportunity for Colorado to eliminate outdated, wasteful tax loopholes that only benefit large corporations and wealthy individuals. We are glad that Gov. Jared Polis decided to invest in small businesses and working families by signing this important legislation.
For far too long, Colorado’s tax code has benefited larger companies by providing them with unfair tax loopholes that did nothing for the Main Street small businesses that powered our economy. Our polling has shown that small businesses are tired of this economic disparity and continue to call on their government to be more responsive to their needs.
The Tax Fairness for Coloradans package will address this by cleaning up and modernizing Colorado’s tax code to make it fairer for low-income Coloradans and small businesses while also ensuring wealthy corporations pay their fair share.
Specifically, it will raise an exemption on business personal property taxes from $7,900 worth of property to $50,000, providing extensive relief for small business owners who had to adapt their businesses to weather the pandemic.
In short, this would provide needed tax relief for small business owners to purchase equipment, furniture, computers, and any physical property for their business. This support is critical for small business owners as they try to adapt their business models post-pandemic.
Additionally, the bill will make significant investments in tax credits for workers and families, which will bolster the economic security of low to moderate-income entrepreneurs and small business employees in Colorado.
This is particularly important to Colorado’s economic recovery because most small businesses are solo enterprises that earn low to moderate incomes. In fact, the median income for self-employed individuals at their unincorporated firms was just $29,928 in 2018, according to the U.S. Small Business Administration.
One of the most significant provisions in the package is funding the Colorado child tax credit (CTC) to help small business owners and employees deal with the costs associated with child care. Our polling found that more than 1 in 3 (36%) small business owners who are parents said access to affordable child care was a barrier to starting their business.
Tax credits like the CTC are proven to benefit local economies, generating $1.50-$2 in economic activity for every dollar paid out to parents. Expanding the CTC will put more money back in the hands of working families, strengthening the small business community overall.
The COVID-19 pandemic has exacerbated economic inequalities, spotlighting the lack of resources available for small business owners who were already struggling before the pandemic. The Tax Fairness for Coloradans bill package gives small businesses a real opportunity to thrive.
We look forward to seeing these tax code changes boost incomes for hundreds of thousands of Coloradans, encourage increased job creation, and support overall economic growth.
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