Exciting news out of Denver. But first, a little background.
Colorado’s budget process is a complicated confluence of constitutional amendments, TABOR restraints and economic conditions. The constitution is the rule book, obviously. And when the economy is strong, the revenue side is strong enough to obscure the problems. But with the Trump Economy teetering on the Trump Depression, Colorado’s budget is about to find itself in an even bigger bind next year. This after the legislature had to have a special session to cut nearly $1,000,000,000 to offset claw backs by the Republicans in Congress. With federal contributions to Medicaid and SNAP food assistance expected to be further reduced, Colorado needs increased revenue just to stay even.
A coalition of liberal advocacy groups has come up with an interesting proposal to lower taxes for 98% of voters while simultaneously raising more revenue. This would be accomplished by changing from a flat income tax rate of 4.4% for everyone to a graduated tax rate, which means the % of income paid goes up with income.
The proposal would lower the tax rate on the first $100,000 of income to 4.2%, and keep it at 4.4% on income between $100,001 and $500,000. This is how it would lower the tax rate for 98% of Coloradoans. The rates go up over $500,000 in annual income.
The Colorado Sun has a good write up.
Thanks to the Bell Policy Center for driving this important initiative, building a coalition with the Colorado Fiscal Institute, the Colorado Children’s Campaign, Great Education Colorado, the Colorado Statewide Parents Coalition, the Colorado Center on Law and Policy, New Era Colorado, the Colorado Consumer Health Initiative, the Blueprint to End Hunger, Colorado Counties and Commissioners Acting Together, the Colorado Cross-Disability Coalition, and the Colorado Organization for Latina Opportunity and Reproductive Rights.
Per our TABOR rights, we, the voters of Colorado, will need to approve this initiative for it to become law. First, it would need to qualify for the ballot. To do that, this proposal would need to gather over 125,000 signatures, with at least 2% from each of Colorado’s 35 Senate districts. Signature gathering alone is forecast to cost millions of dollars.
I have always believed that higher incomes should pay higher taxes. They have disposable income. Working people give up vacations and other primary expenses to pay taxes. At some point – and I would think making more than $500,000 a year is close to or at that point – your primary expenses are met.
I do not support “soak the rich” measures that are overly punitive to the wealthy. I believe this proposal strikes the right balance between a graduated tax system where those who make more pay more while not going too far.