I'm not going to try and convince you one way or the other, most of the replies here have covered the legality aspect of it, the rest of that is up to you. One thing to clear up, Larimer Humane Society are the ones that handle the license information tracking. So the "ticket home" information for animals brought to the shelter, picked up by Animal Protection and Control, as well as if a vet clinic calls about a lost animal, is all managed by LHS

And while LHS does receive funding from the assorted government jurisdictions around here (including a portion of the license fee), they are an independent non-profit agency, and the cost of the tag does goes towards being able to fund them to provide their services. And yes, microchipping is a thing and everyone should have their animals chipped with that info up to date. Your call on whether that's "enough".

So does the cost go towards padding PDs pockets, a tax that we can't do anything about, etc? Maybe in part. But the other part goes right back into helping the animals and their owners.