Bill Summary for Bill Number HB09-1366

Date: 05/01/2009

Final
BILL SUMMARY for HB09-1366

SENATE COMMITTEE ON FINANCE

Votes: View-->	Action Taken:
Adopt Amendment L.015 (Attachment G). The motion Adopt Amendment L.016 (Attachment D). The motion Refer House Bill 09-1366, as amended, to the Commi	FAIL PASS PASS

01:38 PM -- House Bill 09-1366

Senator Romer, prime sponsor, presented House Bill 09-1366 which eliminates the income tax subtraction for Colorado-source capital gains for qualifying capital assets purchased after the effective date of the bill, which is tax year 2010. Taxpayers who purchase qualifying capital assets between May 9, 1994, and January 1, 2010 can still claim a capital gains subtraction on qualifying assets with an aggregate actual (market) value at the time the asset is sold of up to $500,000. Finally, the bill also eliminates the TABOR refund mechanisms that expand the Colorado-source capital gains subtraction.

Senator Romer distributed a fact sheet about the capital gains tax deduction (Attachment A). He also discussed a memorandum from the Office of Legislative Legal Services (OLLS) about the legal tax issues entitled "Constitutionality of the Income Tax Modification for Colorado Capital Gains" (Attachment B) and the one from Legislative Council Staff about the economic impacts of the deduction (Attachment C). Senator Romer discussed the tax treatment of family-owned ranches purchased after 1994 and several potential amendments to the bill.

Senator Romer stated that passing this bill would give the General Assembly an opportunity to address the business personal property tax policy. He said that removing the tax deduction provides an opportunity to eliminate a tax deduction that benefits few Colorado citizens and to spread the impacts of the revenue more broadly.

01:46 PM

Senator Romer responded to questions about tax revenue and education funding. The committee also discussed legislation related to the capital gains deduction in previous sessions of the General Assembly. Senator Romer further discussed the capital gains tax deduction and the business personal property tax.

01:49 PM

Senator Romer continued responding to questions from the committee about the capital gains tax deduction and an amendment related to capital gains taxes and agriculture proposed by Senator Isgar. Senator Isgar distributed a copy of Amendment L.016 (Attachment D). The committee continued discussing this amendment.

01:54 PM

Committee discussion ensued about Amendment L.016 and the impacts of capital gains tax policy on agriculture.

01:57 PM

Mr. Phil Horwitz, representing the Colorado Department of Revenue (DOR), responded to questions from the committee about Amendment L.016. Senator Romer further shared his views about capital gains tax policy.

02:03 PM

Senator Romer continued discussing House Bill 09-1366. He responded to questions from the committee about a potential amendment to benefit the State Education Fund. Senator Romer shared his views about backfilling the business personal property tax revenue as well as his thoughts about putting additional revenue towards education. Committee discussion ensued about these issues.

02:06 PM

Senator Romer responded to questions from the committee about the current Colorado tax law on capital gains and how the General Assembly should move forward. Senator Romer discussed the OLLS memorandum, the grandfather clause, and the commerce clause. He also responded to questions from the committee about the retroactivity of the law. The committee discussed the Fulton Corp. v. Faulknercase.

02:13 PM

Mr. Jason Gelender, Office of Legislative Legal Services, responded to additional questions about the Fultoncase and the capital gains deduction in Colorado law.

02:16 PM

The committee continued discussing the elimination of the capital gains deduction and who should benefit under tax policy.

02:20 PM

Senator Romer responded to questions about income tax revenue and education. Mr. Horwitz, DOR, returned to the table and explained that if the capital gains deduction is removed from Colorado law, the department cannot report to the General Assembly how much revenue would be saved because it would not have the data to calculate this information. Senator Romer shared his views about historical tax information and continued discussing the bill with the committee.

Senator Romer distributed a copy of L.013 (Attachment E). Mr. Gelender provided background information about the amendment and responded to committee questions.

02:32 PM

The committee continued to discuss the amendments, the state's fiscal policy, and how to address Constitutional issues related to tax policy. Senator Romer shared his thoughts about Amendment L.013.

The following person testified:

02:38 PM -- Ms. Laura Oldright, representing the Colorado Fiscal Policy Institute, testified in support of the bill. She provided written testimony to the committee (Attachment F). Ms. Oldright provided information to the committee about who takes advantage of the capital gains tax deduction in Colorado. She also shared her thoughts about fiscal policy and urged the committee to support the bill.

02:43 PM

Senator Sandoval closed public testimony.


BILL:	HB09-1366
TIME:	02:43:50 PM
MOVED:	Isgar
MOTION:	Adopt Amendment L.016 (Attachment D). The motion passed 6-1.
SECONDED:
		VOTE
	Brophy	Yes
	Heath	Yes
	Isgar	Yes
	King K.	No
	Scheffel	Yes
	Hudak	Yes
	Sandoval	Yes

Not Final YES: 6 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS

Senator Romer requested that the committee withdraw consideration of Amendment L 013, and it was not offered. Senator King distributed a copy of Amendment L.015 (Attachment G).


BILL:	HB09-1366
TIME:	02:55:06 PM
MOVED:	King K.
MOTION:	Adopt Amendment L.015 (Attachment G). The motion failed 1-6.
SECONDED:
		VOTE
	Brophy	No
	Heath	No
	Isgar	No
	King K.	Yes
	Scheffel	No
	Hudak	No
	Sandoval	No

Not Final YES: 1 NO: 6 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	HB09-1366
TIME:	02:56:01 PM
MOVED:	Isgar
MOTION:	Refer House Bill 09-1366, as amended, to the Committee on Appropriations. The motion passed 4-3.
SECONDED:
		VOTE
	Brophy	No
	Heath	Yes
	Isgar	Yes
	King K.	No
	Scheffel	No
	Hudak	Yes
	Sandoval	Yes

Final YES: 4 NO: 3 EXC: 0 ABS: 0 FINAL ACTION: PASS

02:56 PM

The committee adjourned.