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Taxpayer Bill Of Rights

Taxpayer Bill Of Rights Definition

The Taxpayer Bill of Rights (abbreviated TABOR) is a concept advocated by conservative and free market libertarian groups, primarily in the United States, as a way of limiting the growth of government. It is not a charter of rights but a provision requiring that increases in overall tax revenue be tied to inflation and population increases unless larger increases are approved by referendum.

Additional meaning of Taxpayer Bill Of Rights:

The most well-known example of TABOR legislation is in the state of Colorado. In 1992, the voters of the state approved a measure which amended Article X of the Colorado Constitution that restricts revenues for all levels of government (state, local, and schools). Under TABOR, state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates if revenues grow faster than the rate of inflation and population growth, without voter approval. Revenue in excess of the TABOR limit, commonly referred to as the “TABOR surplus,” must be refunded to taxpayers, unless voters approve a revenue change as an offset in a referendum.

Under TABOR, the state has returned more than $2 billion to taxpayers rather than using these funds to pay for K-12 education, higher education, transportation, public health services, public safety and other services. Because the law does not adjust for rising productivity, additional income from year to year among the same population cannot be effectively taxed. This has created a scenario known as the “ratchet-down effect,” a term commonly used to describe when revenue subject to TABOR falls below the TABOR limit resulting in the following year’s limit falling below where it would have been had revenues met or exceeded the limit in the prior fiscal year. The “ratcheting down” of the TABOR limit occurred in FY2001-02 and FY2002-03 as a result of depressed revenues during the economic recession.


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