Colorado's Tax Climate Ranks 18th in Country

Date: December 16, 2015

State's property tax fares especially well in new Tax Foundation report.

If you forked over fewer property tax dollars this year, you’re not alone. Colorado’s property tax ranking leapt 11 spots in the Tax Foundation’s 2016 Business Tax Climate Index, tying with Alaska for the biggest improvement in that category.

The state’s overall tax climate advanced to 18th place from last year’s 20th, based on an analysis of five major tax components: corporate, individual, sales, unemployment insurance and property.

Here’s how Colorado fared in various categories:

Overall tax climate: 18th out of 50

Corporate tax: 15th

Individual income tax: 16th

Sales tax: 44th

Unemployment insurance tax: 33rd

Property tax: 12th

Here’s what changed between the 2015 and 2016 State Business Tax Climate Indexes:

·      Property taxes plummeted, boosting the state’s overall ranking

·      Corporate tax ranking dropped from 13th to 15th place

·      Maximum unemployment insurance tax rate fell from 8.9 percent to 8.15 percent

Property tax as a percentage of Coloradans’ personal income plummeted from 3.72 percent to 2.9 percent this year, with collections per capita dropping from $1,637 to $1,349. That translates to a lighter tax burden on individuals as well as local small businesses.

When it comes to sales taxes, however, Colorado’s 2.9 percent rate—the lowest in the country among 45 states that impose one—wasn’t enough to pull the state out of its 44th-place ranking, which remained unchanged from the 2015 index.

Why so grim? Local jurisdictions are to blame. They’ve tacked on their own hefty sales taxes, bringing the average rate to 7.44 percent statewide.

“This may be an understatement in some localities with much higher local add-ons,” the Tax Foundation reports.

Despite these shortcomings, Colorado fared commendably in the 2016 index, highlighting reasons for small business positivity in the coming year.

Related Content: Small Business News | Colorado | Economy

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