Tuesday, March 16, 2010

New Tax Masquerading as a Fee - Updated

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Denver business owners are well aware of Denver's Occupational Tax, unknown in most cities, requiring the quarterly payment of $12 per employee (formerly known as the Head Tax) for the "privilege" of working in Denver. Since raising this tax would have required approval by the voters (TABOR), a new fee has instead been created to bleed more money for City coffers from the hard-hit Denver business owners.

This is a fee to register to pay a tax that you are already paying. Absurd beyond belief! It is also retroactive to Jan 1, but you are granted an extension to pay before June 1. How accommodating!

The unintended consequence will be the closing of many marginal businesses that were not making any money and will now cease to exist just to get rid of this fee/tax. If you had been continuing to pay the tax ($48 per year per employee, including the owner) in the hopes of starting up again, you will now have to pay an additional $50 every two years for the privilege of paying the tax. Many entrepreneurs will choose to not pay by closing their businesses in Denver.

That's what I plan to do.

Update March 17: Councilwoman Jeanne Faatz pointed out that she (and Councilman Brown) voted against the bill in City Council, which approved it last year. Too bad Faatz and Brown are the only Council members who seem to realize that the "funds" they deal with are in real money, taken from real citizens, and not some kind of play money that doesn't matter. My guess is that this new tax/fee will actually decrease the income from the Occupational Tax.

Update March 18: See also The Denver Daily News

Update March 19: Fee on Tax is "Crazy", Tax itself "Wrong-headed" - Mayor Hickenlooper on Mike Rosen show  Starts at about 15:15.

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