Taxes discourage businesses
August 15, 1999
Denver — Eastman Kodak took its business expansion to New York instead of Windsor and MCI WorldCom Inc. chose Nebraska over Aurora for the same reason: the state’s business personal-property tax.
The tax is applied to equipment, furniture, machinery and goods other than land and buildings and has drawn the ire of business officials.
The Colorado Association of Commerce and Industry released a study earlier this month that showed the tax is hurting businesses that make large investments in equipment.
”It is an obstruction to businesses wanting to invest in equipment and improvements,” said Daniel Pilcher, CACI research director.
And the load has gotten heavier on business as $3.76 billion in taxes has been shifted from individuals onto businesses since 1982, he said.
Individuals pay 9.74 percent per $100,000 in assessed valuation on property while businesses pay 29 percent, Pilcher said.
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That results in a taxes, on equal property, of $974 for a resident and nearly $2,900 for a business.
Eastman Kodak, based in Rochester, N.Y., pays about $4 million annually in business personal-property taxes in Colorado, said Lucille Mantelli, director of communication and public affairs.
Colorado is the only state in which the company pays that tax, Mantelli said. Those costs become a factor when Eastman Kodak compares the price of expanding in Colorado with that of other areas.
And three years ago it tipped the scale away from Colorado and toward upstate New York.
Eastman Kodak looked at building in Colorado a $250 million expansion that would have added 75 jobs with salaries in the $60,000 range, Mantelli said.
About $200 million was targeted for equipment, which is taxable under the business personal-property tax. The remainder was for building construction.
However, when the financial analysis was completed the company decided it was better off expanding in Rochester its headquarters instead of Colorado, where the tax cost was just too high.
In 1994, MCI WorldCom considered building a $250 million data center in Aurora. About $230 million would’ve gone toward equipment.
When MCI examined the business personal-property tax, however, the company decided to build its new facility in Omaha.
”Colorado was in the running, but the deciding factor was the tax climate,” said Barbara Gibson, an MCI WorldCom spokeswoman.
Colorado’s business taxes will be reduced in coming years, according to the Legislative Council, the research division of the General Assembly.
Three bills were passed this past fiscal year that will cut corporate income taxes by more than $200 million.
through the 2003-2004 fiscal year.