Eliminating tax double-edged sword

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Eliminating a tax that could give existing businesses money to grow and give new businesses better incentives for relocating to Colorado makes good business sense.

Of course, the value of the tax savings -- and how it could be pumped back into the economy -- has to be weighed against the impact the loss of revenue would have on taxing entities.

There's no way to foresee whether phasing out the state's busines personal property tax would result in more business, but there's no question about how such a move would impact local governments.

Nearly 50 percent of Moffat County's revenue comes from the business personal property tax.

Colorado is one of the few states that taxes businesses annually on property -- from computers to heavy equipment.

The tax is based on the value of that property and as its value depreciates, so does the tax.

Moffat County is on the top of the list of beneficiaries primarily because of the prevalence of large businesses -- mines and the Craig Station power plant -- which invest heavily in equipment.

The bill that would eventually eliminate the tax calls for a reduction each year until 2019, when it's phased out entirely.

On one hand, the gradual effects would give governments the chance to plan and budget for the decrease.

On the other, that can only mean a cut in services as cash-starved governments search for ways to make up for already declining revenue.

Drawing new businesses to Colorado -- which is the goal of the bill -- might offset the decline in revenue to counties, but the likelihood of that happening decreases the farther you get from the Front Range, and is even smaller for the transportation-poor area of Moffat County.

It's also clear -- recent voter surveys tell us -- that raising taxes to cover the deficit would likely be unsuccessful.

In addition, the provisions in the bill put existing businesses -- those who have already contributed to the tax base and provided jobs and services -- at a disadvantage.

The bill calls for all property purchased before 2004 to be taxed at the full amount.

That's no way to repay those who have weathered though economic climates and shown a proven staying power.

Nor is it fair to give Colorado residents a handicap because they made the decision to open a business here first.

Local economic developers will be the first to say that existing businesses are a community's biggest asset and should have the first shot at growth and expansion opportunities.

Colorado has seen an amazing boom in both residents and businesses, and it will continue to do so without economic incentives. As long as Colorado continues to provide a quality of life many seek, recreational amenities and an educated and willing workforce, businesses will come.

There's more historical proof in that than there is in economic incentives that will only reduce the government-provided amenities that new businesses seek -- recreational opportunities, health care, education, solid infrastructure and a high level of services.

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