Colorado's Amendment 66 Increases Taxes on EmployersHR Resource
October 23, 2013 — 2,122 views
With the news out about a week ago, employers in Colorado will be looking at higher taxes thanks to the changes that have been made to the tax law. The 66th amendment will kick up the individual income for those residing within the state of Colorado. Additionally, the taxes will now be calculated using a dual bracket system, as opposed to the previous single bracket system. The changes have brought out some major discussions about the field of business tax and corporate tax. Earlier, pass-through businesses would have to pay taxes only on their business income and not on any corporate income.
Pass-Through Entities and Increased Tax Rates
However, it was found that over half of these organizations came under ‘pass-through entities’. For this reason, the new amendment makes changes to the taxable amount on employers. Since these individuals already pay income taxes at an individual level, the amendment simply increases the tax rate on all these entities. If the income tax at the individual level alone was increased, this would have had a major impact on industries and large businesses. To enable the growth and prosperity of the businesses and corporations, the tax is not added to the amount that is already paid as individual tax.
Employment Created by Small Businesses
About two-thirds of the employment generated in the last ten to fifteen years is from small businesses. If the owners of such start-ups or infant businesses were to face an increased individual income tax, they would be de-motivated from continuing with their business propositions. This would have an adverse effect on the employment, and therefore, on the economy.
Govt. Revenue and Expenditure
The economic slump is already something that is being dealt with at the moment. It is important to provide incentives for the growth of small businesses as such. However, the tax hikes are created keeping in mind the already established organizations that are trying to reduce their taxable quantities by signing under the pass-through entities. Now that this amendment has been enforced, Colorado is sure to see increased government revenue, without compromising on the growth of infant industries and start-up businesses.
The extra revenue will allow for greater spending and expenditure in important lines such as infrastructure and technology. There are a number of reasons for concern though, which is why there is much uproar and unhappiness among firms. Increasing taxes can be a tedious process.