Eye on the Legislature

"After the Session"

July 11, 2016

The broad and all-encompassing purpose of Amendment 69 makes it a very dangerous proposition for the state of Colorado. Telling is the State Treasurer's position that Colorado cannot afford the estimated $28 million it will cost. It is interesting to see those promoting passage of Amendment 69 are the same ones who vowed Obamacare was the answer to healthcare for Americans. Now, many of those same people are blaming Obamacare for all the problems of healthcare.
President Obama, during a speech about passage of the Affordable Care Act, said the plan was not perfect but at least it was something to start with. The millions of people provided with health insurance for the first time in their lives are certainly not complaining. He later claimed ownership of the Act as “Obamacare,” a name that at first was intended as a slam at the President.
Readers are cautioned that anything you read or hear about Amendment 69 means ColoradoCare is across the board totally exempt from the Taxpayers Bill of Rights. There will be no restriction on the tax (premiums) the governing board can impose on you the citizens of Colorado. (Section 10. Exemption. ColoradoCare and this article are exempt from Section 20 of Article X of the Colorado Constitution. [Article X is the Taxpayers Bill of Rights (aka TABOR)].
   Further caution - Section 3. There is hereby established a political subdivision of the state called ColoradoCare. ColoradoCare is not an agency of the state and is not subject to administrative direction or control by any state executive, department, commission, board, bureau or agency.
Last week's column involved a long list of questions.  But first, the definition of “non-payroll tax” as it is stated in the proposed amendment to the Constitution of Colorado:

  • Section 2. Definitions. For the purpose of this Article:  “Nonpayroll income” means total income from all sources specified on Lines 8 through 10, 12 through 18, and 20 through 21 of the Internal Revenue Service Form 1040 for the tax year 2014 or the corresponding lines of any successor form. “Nonpayroll income” does not include any pension or annuity income which is not subject to Colorado incomes taxes pursuant to Section 30-22-104(f)(4), Colorado Revised Statutes, or any successor statute. Here is what is included on the line items specified above:
    1. 1040 IRS Form: line 8 – Taxable interest, tax-exempt interest; line 9 Ordinary dividends, qualified dividends; line 10 taxable refunds, credits or offsets of state and local income taxes;
    2. 1040 IRS Form:  line 12 business income or (loss); line 13 Capital gains or (loss); line 14 Other gains or (losses); line 15a IRA distributions; line 16a Pensions and annuities; line 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc.; line 18 farm income or (loss); and
    3. 1040 IRS Form:  line 20 Social Security benefits; line 21 Other income. List type and amount.
  • Section 9. Funding of ColoradoCare – collection of premiums. On or after July 1 of the year following the effective date of this article, and until thirty days before ColoradoCare assumes responsibility for health care payments, the Colorado Department of Revenue shall collect a transitional operating fund tax of:
    1. Six-tenths percent of total payroll from each employer;
    2. Three-tenths percent of all payroll income from each employee;
    3. Nine-tenths percent of all nonpayroll income from all beneficiaries; and
    4. From July 1 until December 31 of the first year in which the taxes in this subsection (1) are levied, they shall be levied on fifty percent of the beneficiary's total nonpayroll income.
  • Thirty days before Colorado Care is to assume responsibility for health care payments, the Colorado Department of Revenue shall cease collecting transitional operating fund taxes and shall begin collecting a premium tax of:
    1. Six and sixty-seven-one-hundredths percent (6.67%)of total payroll from all employers, which satisfied their obligation to provide health care insurance for their employees;
    2. Three and thirty-three-one-hundredths percent (3.33%) of all payroll income from each employee; and
    3. Ten percent of all non-payroll income (10%) from all beneficiaries;
    4. If the premium tax levied pursuant to this subsection (2) is first levied on a date other than January 1, it shall be levied on the beneficiary's total nonpayroll income multiplied by the percentage of the calendar year in which the tax is first levied.
  • Payment of the premium tax does not constitute the purchase of a health insurance policy by an employer or taxpayer.

   Let's repeat that:  (3) “Payment of the premium tax does not constitute the purchase of a health insurance policy by an employer or taxpayer.”
Section (9) (8):  If the Board determines that a premium increase is necessary to maintain the fiscal stability of ColoradoCare, the Board may increase the premium taxes specified in subsection (2) of this section not more often than once per fiscal year, but only if a majority of the members of ColoradoCare who cast votes on the proposed increase approve it.
Section (9)(8) means an increase every year, you can bet your retirement on that!
More next week.

The reader's comments or questions are always welcome. E-mail me at doris@dorisbeaver.com.