So the second-best thing to do with the extra tax money is to give it back to the taxpayers. The legislature will meet in September to determine how this year's surplus will be rebated. In other words, Governor Romer used the tax rebates to redistribute income. Governor Romer argues that income tax liability should not be the sole determinant of refund eligibility because this excludes 600,000 Colorado citizens who pay no income taxes but who pay sales and excise taxes and fees. Romer's argument that people who pay fees should get a rebate is bizarre.
Citizens pay fees to offset the cost of the provision of government services.
The fee-payers are subsidized to the extent that the fees do not cover the total cost of providing these government services. For example, all students attending public universities and colleges are subsidized because the tuition that they pay does not equal the cost of providing them a college education. Students who pay tuition should not expect to be further subsidized through rebates of surplus revenue. What Governor Romer fails to point out is that the current tax code already provides substantial tax breaks to low income families. There are several exemptions to state sales taxes, including food, prescription drugs, and residential heat, light, and power.