Child Care Tax Break Expansion Among Many Proposed CO Incentives
Colorado lawmakers are considering a number of new tax credits. Some are targeted to just a few interests, but others extend breaks to a broader base.
One such proposal would give low-income parents higher tax refunds to offset their child-care costs. Ali Mickelson, a tax-policy attorney for the Colorado Fiscal Institute, said it expands an existing incentive.
“It’s very targeted,” she said. “It’s a proven program and benefits lots and lots of families and reduces any sort of income inequality.”
But there’s a downside. Incentives divert tax revenue away from the state’s general fund, Mickelson said, which could mean less money for state services.
Many credits have operated without oversight, but Mickelson said that’s starting to change.
“We are seeing more and more sunsets put on credits, which means that they will end after five years or at least be reviewed before they’re continued,” she said. “Things like that are encouraging because they do kind of set those parameters on how to evaluate what’s good and what’s working.”
The number of proposed new incentives tends to ebb and flow with the state’s fortunes. Mickelson said lawmakers come up with more incentives in years when revenue increases.
The related Colorado Fiscal Institute report is online at coloradofiscal.org.