Ill-intended to confuse voters, Initiative #306
Ill-intended to confuse voters – that would be Initiative #306 sponsored by Jon Caldara and the Independence Institute. When the I.I. and its coalition partners:
- Colorado Rising State Action
- Unite for Colorado
- Americans for Prosperity
worked to get title on this initiative, State Income Tax Reduction, it is obvious the intent was to confuse voters who have been learning about Fair Tax Colorado’s Initiative 271 (which also cuts taxes for 95-96% of Coloradans, in addition to creating a tiered tax structure that brings in $2 billion revenue for the state.) It’s well known these organizations are anti-tax.
Under the I.I. , extremist, initiative, Colorado would continue to be a flat rate tax state, but the tax rate drops from the current 4.63% to 4.55%. Sounds like a great deal, IF you don’t care that we see another budget year like this one with draconian cuts to education and other services provided by the state – and for the foreseeable future. (And don’t care that low-income earners pay more of their overall taxes than high income earners. Check out this Colorado Fiscal Institute video, The Truth about Taxes in Colorado:
What would the Independence Institute’s initiative mean for Colorado’s General Fund revenue, especially since income taxes are 61% of the General Fund? According to the Impact Statement by the nonpartisan Legislative Council Staff, https://leg.colorado.gov/sites/default/files/initiatives/2020%2523306FI.00.pdf
“The measure reduces General Fund revenue by an estimated:
- $78.1 million in the current FY 2019-20
- $158.4 million in FY 2020-21, and
- $169.8 million in FY 2021-22”
“The measure reduces the amount available to be spent or saved during FY 2020-21 by $236.5 million through its combined impacts on the General Fund beginning balance and General Fund revenue. Because the measure will take effect after a budget is enacted for FY 2020-21, it is assumed that the measure will require reductions to appropriations in order to balance the budget. Any required reductions will be addressed during the supplemental budget process during the 2021 legislative session.”
“The measure reduces the amount available to be spent or saved during the FY 2021-22 by $169.8 million.”
According to the Colorado Fiscal Institute https://www.coloradofiscal.org/category/blog/
“Reduced income tax collection is driving the decline in revenue for our state” (a result of struggling economy – businesses struggling to stay afloat, and many closing; and many employers forced to lay off large numbers of employees).
It’s worth noting again: Income taxes are 61% of the General Fund.
“During the last two decades, income gains for those at the very top have grown substantially, but that hasn’t translated into similar gains for education and transportation. Overall, the wealthiest Coloradans pay the lowest share of their income in state and local taxes.”
As you can see here, lowest earners pay the largest share of family income in state income and local taxes. If you earn between $22,000 and $40,000, you’re paying 9.0% of your income in taxes; while the top 1% earners, those earning above $600,000 pay only 6.5%.
So here’s why the ill-intended confusion:
Fair Tax Colorado’s initiative #271 also provides for a tax reduction. All Coloradans receive a tax cut on the first $250,000 in taxable income as it lowers the current 4.63 percent tax to 4.58 percent (95-96% of state taxpayers). But it also helps equalize across all taxpayers the portion of their income they pay in state and local taxes by creating a tiered tax structure.
Tax increases would impact 5% of Colorado’s taxpayers.
Check out: https://fairtaxcolorado.org/taxcalculator/
For tax year 2021, the rates in the measure are:
- For taxable income up to $250,000 = 4.58%
- For taxable income from $250,000 up to $500,000 = 7%
- For taxable income from $500,000 up to $1,000,000 = 7.75 percent;
- For taxable income from $1,000,000 and up = 8.9%
By increasing rates on the higher income earners, Fair Tax Colorado #271 raises revenue:
“According to the most current estimate provided by Legislative Council Staff in the Fiscal Impact Statement, Initiative #271 will raise $2 billion. Revenue collected from the increased individual income tax is exempt from the state TABOR limit as a voter-approved revenue change. Revenue is required to be appropriated and spent as follows:
- 50% to supplement current funding for pre-primary through 12th grade education, and
- 50% to address the impacts of a growing population and a changing economy, of which no more than 10% may be expended for administrative costs.”
7 of 10 Colorado voters say the state should avoid cuts to schools, roads, and health care by increasing taxes on the wealthy
- In recent polling, when voters were asked their preference on how to close the $2 billion state budget deficit, the majority (69%) prefer to avoid cuts to state services by increasing taxes on wealthy Coloradans.
- Across party-lines, genders, ages, income levels, and geographic regions, Coloradans support a fair tax to help our communities recover from COVID19
Make sure you know the facts – and please do not be confused about what #306 does for our state versus Fair Tax Colorado #271, because it does absolutely nothing except dig us into a deeper hole.