CBSA Advocates to Sustain a Supportive Tax Environment for Ecosystem
By: Colorado BioScience Association Date: 06/15/2020
Just days before the end of the session, Colorado state legislators introduced House Bill 1420, a controversial measure that would eliminate critical tax breaks and relief for Colorado businesses of all sizes. CBSA opposed the legislation, recognizing the devastating impact it could have on our companies and Colorado’s innovation ecosystem. We were particularly concerned about a provision that would limit the net operating loss deduction a company can claim in one year to $400k. This would be hugely punitive for our ecosystem and would discourage life sciences companies from doing research and development in the state of Colorado.
House Bill 1420 moved at lightning speed, passing the first legislative chamber in just a couple days with no real stakeholder engagement. As a result, CBSA worked quickly to communicate our opposition to members of the state legislature, and on Friday, we testified in opposition to the bill in the Senate Finance Committee.
During the week, CBSA also engaged leaders of our community and encouraged them to weigh in with legislators about how the bill would impact their business and employees. We are grateful to the many members of our ecosystem who sent emails and made calls urging legislators to oppose the bill. We know your outreach made a difference.
After days of negotiations, the Senate ultimately adopted an amendment that made significant changes to the legislation. One important change to the bill removed the cap on net operating loss deductions, which is a big victory for CBSA and our members.
Other changes to the bill included:
- Increased the cap on 199A tax deductions to $500K for a sole filer/$1 million for joint filers and added a sunset of 2 years
- Struck provision eliminating the state income tax modification for qualifying net capital gains
- Struck provision repealing the tax exemption for energy used in manufacturing, processing and other industrial activities
- Struck provision eliminating regional home office insurance tax credit
The amended version of House Bill 1420 passed both legislative chambers on Monday, June 15 and is now on its way to the Governor for his signature.
Thank you to everyone in our life sciences community who engaged on the issue and reached out to state legislators to share your concerns. We appreciate your commitment to sustaining a supportive tax environment for our ecosystem.