Amendment U: A Step Forward For the State’s Economy

It’s pretty clear that Colorado would benefit from Amendment U. The current possessory interest tax is flawed, and regardless of the small impact it may have on the economy, it is still a cost for the state. Amendment U is a step forward for the state’s economy; the progress may be small but it’s still progress.

As of right now, private business ventures that occupy public property pay a property tax that derives from the businesses market value that is referred to as “possessory interest.”

Amendment U will create a tax exemption for these interests whose market value is less than $6,000 and adjust for inflation every two years starting 2019.

Supporters argue that administrative costs to collect the possessory tax exceed the revenue from the tax itself. This makes sense since the majority of possessory interests in Colorado are for agricultural leases that are usually taxed around $10 in property taxes.

The cost of mailing notices, maintaining tax rolls, collecting, and enforcing the tax does exceed the $10 the government is trying to get from some farmer/rancher who leases government land to feed his livestock. Yet it is still an unfair tax break for private businesses on government property that profit from it even if the tax itself is minuscule. Taxes should still be collected uniformly from all taxpayers. Amendment U would transfer the tax burden on others to pay for government services.

A small tax does not justify a tax break for those who use government land for their own benefit.

In Colorado there are 7,000 businesses that fall under the possessory interest tax. These businesses bring in an overall revenue of $315 million, as well as paying about $7 million in taxes a year. The tax exemption will apply to roughly 5,100 of those businesses who on average pay $24 each for the current tax. Amendment U is expected to lower property taxes in the state by up to $125,000 a year, beginning in the budget year 2018-19.

With fewer properties to assess, less tax notifications to mail and process, counties will undoubtedly save money.

Further information is available in the Colorado Blue Book.