Taxpayer Bill of Rights

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The Taxpayer Bill of Rights (abbreviated TABOR) is a concept advocated by conservative and libertarian groups as a way of limiting the future growth of government by requiring increases in overall state government spending to be tied to inflation and population increases, sometimes known as "popu-flation" indexes.[1]

The first successful ballot initiative to cap state spending through a TABOR-style reform was the Colorado Taxpayer Bill of Rights Act of 1992. In 2005, this 1992 measure was suspended for five years via Referendum C.

In 2006, TABOR measures were on three state ballots--Maine, Nebraska and Oregon. All three measures were defeated.

Attempts to place TABOR ballot initiatives before the voters in five other states that year--Michigan, Missouri, Montana, Nevada, Oklahoma--failed for various reasons.

Foes of TABOR outspent TABOR supporters cumulatively in 2006 in Maine, Nebraska and Oregon by $7.9 million to $3.5 million. The $3.5 million spent in favor of TABOR measures includes approximately $1.5 million simply to place the measures on the ballot, meaning that in terms of post-petition drive spending, TABOR foes had an approximately 4 to 1 advantage over TABOR supporters.[2]

The Colorado example

Douglas Bruce

The most notable example of citizens enacting a TABOR reform was in 1992 in Colorado, when voters enacted the Colorado Taxpayer Bill of Rights Act, which amended Section 20 of Article X of the Colorado Constitution so that any tax increase resulting in the increase of governmental revenues at a rate faster than the combined rate of population increase and inflation as measured by either the cost of living index at the state level, or growth in property values at the local level, would be subjected to a popular vote. This process became known as "de-Brucing" after Douglas Bruce, the author of the amendment. The amendment applies to cities and counties in Colorado as well as the state itself. Additionally, any "natural growth" in revenues that exceeded this rate was to be either earmarked for educational improvements or rebated to the taxpayers once an adequate reserve ("rainy day") fund was established. This has led to a decrease in actual tax revenue (relative to population and inflation) for two reasons. Because the law does not adjust for rising productivity, additional income from year to year among the same population can not be effectively taxed. Secondly, the law only looks at the previous year, leading to a "ratchet-effect," wherein if tax revenue temporarily lowers in a recession, revenue can not rise back to pre-recession levels without a referendum. In Colorado, these factors have led to a decreasing overall tax revenue in the state.[3][4][5]

Referenda to allow revenue increases have generally failed in Colorado, and there are many reasons to account for this trend in addition to voter preference. Referenda have generally been held in "off years" away from other elections; experience indicates that holding referenda on dates away from other elections makes changes easier to defeat, as turnouts are lower, and opponents of a measure are often better-organized while the supporters of such measures tend to be less energized and are more likely to vote on specific issues if they are on the ballot at the same time as candidates for office. Additionally, these measures are very technical and deal with dense tax law matters, which may be somewhat impenetrable to the average voter.

In 2000, an amendment known as Amendment 23 was passed. This required education spending to increase at a certain rate regardless of revenue, and led to a greater portion of revenue devoted to education. TABOR and Amendment 23 together required that other cuts in spending be made to offset education increases, and many of these cuts were unpopular.[6]

In November of 2004, both houses of Colorado's legislature became controlled by Democrats, and Democrats were elected to the United States Senate and United States House of Representatives, replacing Republicans. This was interpreted by some as a reaction against TABOR. Days after the election, Republican governor Bill Owens announced a plan to reform TABOR. In November of 2005, Coloradans approved Referendum C, a ballot measure that loosened some of TABOR's restrictions for five years. One of these changes allows the state to spend an amount equal to the highest amount of the last five years, not necessarily the last one year.[7]

In March of 2014, the U.S. Court of Appeals for the Tenth Circuit ruled on Kerr v. Hickenlooper, a constitutional challenge to TABOR. The court held that the general assembly has the standing to challenge the constitutionality of the TABOR amendment. Legislators claimed that the amendment fundamentally undermined the ability of Colorado’s representative democracy to function and that, as a result, the state no longer has a "republican form of government," violating the Guarantee Clause of the United States Constitution. On July 22, 2014, a petition from Colorado Attorney General John Suthers for the Tenth Circuit to re-hear their previous decision was denied.[8][9][10]

March also marked the realization that TABOR may have an impact on the state's recent legalization of marijuana. Revenues from the sale of marijuana that was supposed to be put toward schools or substance abuse program funding may now be returned to taxpayers under TABOR statutes. In order to uphold original intentions for the distribution of marijuana tax revenues, the state may need to create a ballot measure asking voters for permission to keep the funds rather than refund them.[11][12]

Advocates of TABOR

Proponents of Colorado's TABOR describe it this way:

  • "TABOR (the Taxpayer's Bill of Rights) is a tax-and-spending limitation passed by the voters in 1992 as an amendment to the State Constitution. TABOR's stated mission is to "reasonably restrain most the growth of government." It allows only those tax rate increases approved by voters, and requires the State to refund back to the taxpayers any excess tax collections. In other words, under TABOR, if the State wants more of your money, they have to ask you for it and tell you what they're going to do with it. Past TABOR refunds have totaled $3.25 Billion."[13]

Advocates of the concept see the experience of Colorado as an example of the positive effects of tax decreases. They cite the fact that Colorado's economic growth in the dozen or so years since this system was implemented has been well in excess of that of the U.S. as a whole. They also say that deciding tax increases in referenda is more democratic, as legislators may be beholden to special interests and lobbyists. Counter-arguments to this by opponents are seen as elitist, and supporters claim that the voters are the best judges of how to spend what is, in the final analysis, their own money.

Americans for Limited Government

Many advocates of a more libertarian bent, such as Americans for Limited Government lead by Howard Rich, believe that lower taxation is a noble goal in its own right, leading to increases in financial freedom and economic prosperity. Others note that Colorado has had continued growth as well as larger tax revenues concurrent with the TABOR act.

Advocates claim that the assertion that Colorado ranks 47th in school funding is transparently misleading. The figure, which comes from the U.S. Census Bureau’s report titled Public School Finances 2004, measures spending as a percentage of personal income. Colorado appears to be low in these rankings because of the high earning power of its taxpaying residents. Using the same set of figures, a poorer state like New Mexico ranks 7th, though it actually spends fewer dollars per pupil than Colorado.[14]

Measuring all K-12 education expenditures (including construction costs and debt repayment) for 2003-2004, data from the National Center for Education Statistics (NCES) place Colorado at 28th in the nation ($9,073). Strictly measuring operational costs for the same year, Colorado ranks anywhere from 23rd ($8,263 - National Education Association) to 33rd ($7,478 - NCES) in “current” per-pupil spending.[14]

In 1992, the year before TABOR took effect, the state of Colorado paid 45 percent of the per-pupil funding for public schools. Fourteen years later in 2006, the state’s share grew to 62 percent. From 2000-01 to 2005-06, Colorado’s overall per-pupil contribution in state dollars to K-12 education (including all education funds, not just per-pupil funding under the School Finance Act) increased by 28 percent—or by 16 percent, after adjusting for inflation.[14]

TABOR proponents argue that conclusions regarding Higher Education spending are equally misleading, as they are drawn from the same fallacious comparisons of personal income.

Opponents of TABOR

Opponents argue that the lack of tax revenue has hurt Colorado. For instance, these opponents say in 2006 Colorado was ranked 48th in the nation for K-12 education funding (per personal income level), representing a drop from 35th in 1992. According to the same research, the trend continues in higher education, with a decline in rank from 35th in 1992 to 48th in 2008 as well as a 31 percent drop in education funding per resident student.[15]

In addition to a reduction in funding for education, researchers cite TABOR as contributing to drops in funding for public health programs and in limiting Colorado's ability to address a lack of medical insurance coverage. Colorado's rankings for the percent of pregnant women who receive prenatal care, children who have been fully vaccinated and low-income children and adults with health insurance or Medicaid have all dropped since 1992.[15]

Opponents also argue that Colorado's economic growth has largely been despite - not because of - this system, and is a result of changing societal desires for open spaces, outdoor sports opportunities, and other "quality of life" issues that are now imperiled by Colorado's inability to provide expanding governmental services. They point out that almost 90% of state tax revenues are now already earmarked for various purposes, handicapping the state legislature and giving it less flexibility.

They also add that the process has not been as "democratic" as its advocates purport, citing the off-year voting and complex wording that may skew results. Some supporters claim that complicated tax decisions are best decided by deliberation based on well-informed argument and informed consent, such as presumably occurs in legislatures, and are unwilling to leave these decisions to voters in the style of direct democracy.

TABOR in other regions

Reforms similar to Colorado's have been put forward in several states. In 2006, two Libertarian groups led Howard Rich supported ballot initiatives for laws similar to TABOR in Maine, Nebraska and Oregon. All three measures were rejected by the voters of those states.

In 2011, Arizona Governor Jan Brewer vetoed a bill that imposed a population-plus-inflation formula on state revenue and voters in Florida rejected a measure to replace the state’s current revenue limits, which are based on average personal income, with an inflation-plus-population limit like TABOR’s.[16]

External links


  1. Center on Budget and Policy Priorities, "Policy Basics: Taxpayer Bill of Rights (TABOR)," accessed July 23, 2014
  2. Follow The Money analysis of TABOR donations
  3. Colorado State Legislative Council, "1992 Ballot History," accessed July 23, 2014
  4. The Bell Policy Center, "Colorado's TABOR," accessed July 23, 2014
  5. Colorado Department of the Treasury, "Constitutional Provisions," accessed July 23, 2014
  6. Colorado State Legislative Council, "2000 Ballot History," accessed July 23, 2014
  7. Colorado State Legislative Council, "2005 Ballot History," accessed July 23, 2014
  8. CBA CLE Legal Connection, "Tenth Circuit: Colorado Legislators Have Standing to Challenge Constitutionality of TABOR Amendment," March 12, 2014
  9. Tabor Case, "TABOR Lawsuit," accessed July 23, 2014
  10. The Denver Post, "Colorado AG loses another round from Court of Appeals on TABOR lawsuit," July 22, 2014
  11. KDVR, "TABOR may force Colorado to refund excess marijuana money to taxpayers," March 12, 2014
  12. The Denver Post, "High Colorado spending could trigger TABOR refund on cannabis revenues," March 19, 2014
  13. Strike a Better Balance, "What is TABOR and what does it do for us" (timed out)
  14. 14.0 14.1 14.2 Independence Institute, "TABOR Benefits Colorado’s Citizens: A response to misleading video," accessed July 23, 2014
  15. 15.0 15.1 Center of Budget and Policy Priorities, "A Formula for Decline: Lessons from Colorado for States Considering TABOR," March 15, 2010
  16. National Conference of State Legislatures, "Tabor at Twenty," accessed July 23, 2014