Colorado voters rejected state ballot proposals to raise income taxes and to broaden the right to compensation for property value lost due to government action.
Amendment 73 on the November ballot proposed to replace the state’s flat-rate personal income tax with higher, progressive rates, raise the state’s corporate income tax rate, and exempt public education spending from limits in the state’s Taxpayer’s Bill of Rights (TABOR).
Amendment 74 would have added language to the Colorado Constitution requiring compensation to property owners for any decrease in the market value of their property caused by government regulations or laws.
Teachers’ unions backed Amendment 73, and the Colorado Farm Bureau backed Amendment 74.
Big Tax Hikes Averted
Amendment 73 would have established a progressive personal state income tax with five income brackets. The lowest bracket would have been the current flat tax rate of 4.63 percent. Those with incomes above $150,000 would have been taxed at higher rates, ranging from 5 percent to 8.35 percent.
In addition, the corporate income tax rate would have been raised from 4.63 percent to 6 percent.
The expected additional tax revenues, estimated at $1.6 billion per year, were to be spent on government schools.
Future increases in spending on public schools would have been made exempt from limits in the state’s Taxpayer’s Bill of Rights (TABOR). Colorado’s TABOR, enacted in 1992, limits increases in state spending to inflation plus population growth and requires voter approval for tax hikes.
Uncompensated Takings Remain
Colorado voters also rejected Amendment 74, which would have required state and local governments to pay “just compensation” to property owners for any loss in the “fair market value” of their property caused by government regulations or laws. The proposition did not define “just” or “fair.”
Regulations restricting the development or use of property, such as farmland, do not require compensation under current state law.
Fraught with Uncertainties
Amendment 73 would have created a board to decide how to spend the tax revenues dedicated to a Quality Public Education Fund. Voters were not told how the money would be spent, state Rep. James Wilson (R-Salida) says.
“Amendment 73 sounds good on the surface, but it’s a bait-and-switch,” Wilson said. “With an overall education budget of $7 billion, we have to ask, ‘Where is this money really going?'”
Opponents of Amendment 74 emphasized the possibility of unintended consequences from its broad language, says David Kopel, research director at the Independence Institute, a Colorado think tank.
“The opponents of the initiative successfully presented the problems of a similar initiative that had been enacted in Oregon, caused unforeseen consequences, and was thereafter repealed by the voters,” said Kopel. “Something with more narrow language might stand a better chance in the future.”
Joe Barnett ([email protected]) is a research fellow with The Heartland Institute.
Colorado state Rep. James Wilson (R-Salida):
Ashley Herzog, “Progressive Income-Tax Amendment Question Reaches Colorado Ballot,” The Heartland Institute, September 12, 2018: https://heartland.org/news-opinion/news/progressive-income-tax-amendment-question-reaches-colorado-ballot