I just finished my Colorado state income tax return and man am I angry. No, I am not angry at how much I had to pay. As state income taxes go Colorado is not as bad as many. I usually end up paying about 3% of my net business income to the state. What I am angry about is the form that I am required to use to properly file my taxes. It has grown in size over the years and this year it became so large the powers that be decided to slough off separate schedules for things that used to be a part of a one-page form. Let me tell you about what is going on in the Colorado Department of Revenue for a bit today.
When I filed my first state income tax return, in 1979, the form was only a couple of lines long and did not even take up an entire page. It was pretty simple. I basically took my taxable income from my federal form and multiplied it by 5%. That was how much I owed and that was the end of it. The form I just filed with the state goes on for three solid pages and included another full page schedule that I needed to complete to file my taxes properly. The schedule that got kicked off the main form this year was related to what the state calls "subtractions" from income. The subtractions used to be on the main form but for some reason I do not understand they are now a separate schedule. Interestingly enough, the "additions" to state income managed to remain on the primary form. I wonder why? It made no sense to kick the subtractions to a separate schedule because the list of subtractions is quite small and could have fit on the main form with no problems. My guess is that the tax collectors thought it would be a good idea to make claiming subtractions from income more difficult, thus hoping fewer people would do it and state revenues would increase. I would love to be on the inside of the revenue bureau and get to see just how many taxpayers decided to skip the hassle associated with the new schedule and simply paid a higher tax. I bet it is significant. That made me mad, but my anger got worse when I saw what the state had done with charitable contributions.
For some time now the state of Colorado has been permitting deductions from income for contributions to specific charities that the state favors. These are above the line deductions and are available to anyone who is willing to give some cash to the groups favored by the tax collectors and the career politicians who select the favored groups each year. The list of favored groups was pretty small when it first started several years ago. This past year the list had grown to twenty different charities and the state had to create a separate schedule to contain all of them.
Here are some of the more interesting, from my perspective, charities that the State of Colorado wants me to contribute to: Western Slope Military Veterans Cemetery Fund (What? Military veterans who die in the metro area don't get access to a free cemetery plot?), Pet Overpopulation Fund (I love this one. Do the funds go for spaying the animals that come into the pound or just killing them?), Military Family Relief Fund (I am not sure what this fund does but we can't give too much to the heroes who have kept us free, can we?), Roundup River Ranch Fund (I have no idea what this is but I would suspect that some career politician has a financial interest in some place called the Roundup River Ranch.), Colorado for Healthy Landscapes Fund (Yea, Colorado is an ugly place. We need more money to clean it up.), Colorado Healthy Rivers Fund (If the "landscapes" are entitled to some funds then the rivers should be as well, by golly!), and the Unwanted Horse Fund (I bet some meat packers would be willing to take these horses off our hands for free.). What a lovely list of charitable options are presented to Colorado taxpayers each year.
The opportunity to get your charity on the list of state approved charities is no laughing matter. According to the Denver Post, "Marketed as a simple way to donate to charities each tax season, the state-sanctioned program has raised more than $7 million in five years, all thanks to a voluntary checkoff on state income tax returns. The nonprofits fortunate enough to make the list consider the program a godsend, helping the most popular causes to generate more than $150,000 with little effort. But the official seal of approval obscures uncomfortable realities: Most of the organizations receive no state oversight and won a spot with political clout." I am shocked! Imagine that! The state approved charitable organizations obtained their state approval by means of "political clout." Has that ever happened before? I can just see it now....some charity has some money to dedicate to the reason it came into existence in the first place but the Trustees decide that the money would be better spent ("invested" they would say) in lobbying some career politicians for a place on the chosen charity list. If they can get on that list they can double or triple their resources. What a deal!
Why is the state involved in sponsoring charitable institutions? What possible positive result can come out of the unholy union of charity and state? Why are no churches or Christian institutions on the list of approved charities? Why are horses, landscapes and rivers deemed to be of greater importance than needy people? Who decides who gets on the list and how are those decisions made? The entire process is filled with the potential for fraud. And I am not so naive as to believe that it is not actually filled with fraud as well. The State of Colorado needs to eliminate all check-off charities and get out of the charity business all together. The longer it stays there the more disruption it will cause as it inevitably does what government programs always do....pick winners and losers.