Summary
House Appropriations voted 7-4 to send HB25B-1002 forward; the bill would decouple Colorado from the federal foreign‑derived intangible income (FDII) deduction and add five jurisdictions to Colorado
Representatives Zocai and Marshall presented House Bill 25B-1002 to the House Appropriations Committee as part of the legislature response to recent federal tax changes. The bill would (1) decouple Colorado from the federal FDII (foreign derived intangible income) deduction and (2) expand Colorado list of presumed tax‑haven jurisdictions by adding Hong Kong, Ireland, Liechtenstein, the Netherlands and Singapore.
Rationale: sponsors said Colorado uses "rolling conformity" with federal taxable income, meaning many federal tax breaks automatically flow into Colorado law and reduce state revenue. Representative Zocai told the committee that FDII allows multinational corporations to claim special deductions on foreign‑sourced income tied to intangible assets, and that Colorado should not import those federal giveaways when they do not generate economic activity in state. Representative Marshall emphasized the state auditor concerns that Colorados revenue has been exposed by automatic federal changes.
Testimony: Caroline Nutter (Colorado Fiscal Institute) and Commissioner George Marlin (Clear Creek County / CCAT) testified in support, saying the changes protect revenue for schools, health care and local services. Ian Miller and other advocates linked protecting revenue to maintaining social services. Opponents from the business community questioned the assumption that listed jurisdictions are automatically tax havens or that corporations using foreign subsidiaries are automatically engaging in abuse; Representative Taggart argued that many multinational firms legitimately operate subsidiaries abroad and warned against a "guilty until proven innocent" approach. Representative Marshall and sponsor Zocai said the proposal includes a process for a company to rebut a presumption that a jurisdiction is a tax haven.
Committee action: Representative Zocai moved the bill to the Committee of the Whole; Representative Velasco seconded. The roll call recorded 7 yes, 4 no; the bill passed out of committee on a 7-4 vote.
Implication: if enacted, the bill would increase state taxable income for affected corporations and remove a federal deduction from Colorado calculation, and it would add the five jurisdictions to Colorado list with a rebuttable process. Sponsors framed the change as closing loopholes that shift profits out of Colorado while leaving counties and schools with service needs. Opponents raised concerns about legitimate international business operations and potential competitive effects on Colorado employers.
Next steps: The bill advances to the Committee of the Whole for further consideration.
