Colorado voters will decide in November whether to approve a ballot measure that would replace the state’s flat income tax with a progressive tax and increase taxes on business owners and on individuals earning more than $150,000 per year.
Amendment 73, the Establish Income Tax Brackets and Raise Taxes for Education Initiative, asks for voters’ approval of a state constitutional amendment creating four new income tax brackets to replace the current 4.63 percent rate paid by everyone with any taxable income.
The proposed amendment would also increase the state’s corporate income tax to 6 percent from its current 4.63 percent. The revenue from the tax hikes would be dedicated to a “Quality Public Education Fund” to be created under the measure.
‘It’s a Bait-and-Switch’
Colorado state Rep. James Wilson (R–Salida) says the initiative is being presented deceptively.
“Amendment 73 sounds good on the surface, but it’s a bait-and-switch,” Wilson said. “If we pass Amendment 73 and establish the ‘Quality Public Education Fund,’ preschool spending, for example, will increase by $10 million. We already spend $250 million on kindergarten alone. So that $10 million provided by the Quality Education Fund is a drop in the bucket. With an overall education budget of $7 billion, we have to ask, ‘Where is this money really going?'”
Killing the Golden Goose
Penn Pfiffner, chairman of the Taxpayers Bill of Rights Foundation, says Colorado’s current, simple flat tax is attractive to new residents seeking success, and the proposed amendment would chase those achievers away.
“Our economy is doing very well compared to other states, and a major reason for the success here is a favorable tax environment that rewards people coming here searching for the American Dream and achieving it,” Pfiffner said. “If Amendment 73 passes, it will be like hanging a sign that says, ‘Take your success elsewhere.’ It lays a heavier and heavier burden on people as they earn more. It adds a disproportionate penalty on income, as income rises.”
Pfiffner says Amendment 73 would make Colorado unattractive to entrepreneurs, who will literally take their business elsewhere.
“It increases the corporate income tax by 30 percent,” Pfiffner said. “We will be very uncompetitive, with much better deals to be found in other states in the West, if this amendment passes. Anybody who’s earning funds—business owners, corporations, and individuals—will be hurt by this very greedy, over-the-top scheme put forth by the teacher’s union.”
Questions Revenue Need
Wilson says Colorado’s government schools already provide high-quality education for children, with the existing levels of government revenue.
“Our schools are already some of the best of the best,” Wilson said. “They’re succeeding on our current budget. Of course, some of Colorado’s school districts are more successful than others. How can some districts succeed on the current budget and others cannot? Instead of asking what the best school districts are doing right, the less successful districts just say, ‘We don’t have enough money.'”
Pfiffner says there’s no causal relationship between school spending and educational quality.
“There’s no correlation between the amount spent on K-12 education and the quality of that education,” Pfiffner said. “It’s important to remember that looking at national averages is very misleading. Including school districts that spend huge amounts, like Washington, DC and New York, skews the average. We compare very favorably, and we are ahead of most states around us.”