My last column was about the Fair Tax, a plan voters may get a chance to approve this November to cut taxes for the 95% of Coloradans and businesses who make $250,000 a year or less–and raise them on the wealthiest 5% in progressive increments. This would generate an estimated $2 billion in revenue to help “backfill” the $3.3 billion that disappeared when we took necessary action to slow the spread of the coronavirus pandemic. It’s a fair way to solve a historic budgetary crisis.
There’s another measure that voters may get a chance to weigh in on this November, and although it sounds similar, it would have a much different effect. Instead of increasing funding for our schools and roads and making our tax system more fair, it would blow an even bigger hole in our budget and disproportionately benefit the wealthy. Initiative No. 306, basically the polar opposite of the Fair Tax, cosponsored by Republican State Sen. Jerry Sonnenberg of Sterling and Jon Caldara of the Independence Institute, cuts the state’s one-size-fits-all income tax from the current 4.63% to 4.55%. That doesn’t sound like much, and for individual Coloradans it doesn’t amount to that much. But it’s enough to force another estimated $150 million per year in new budget cuts on top of the $3.3 billion revenue shortfall the Colorado legislature is currently wrestling with.
I reached out to Sen. Sonnenberg, a thoughtful conservative with whom I have many disagreements, this initiative being one, and asked how the revenue reductions in his initiative fit with his desire to adequately fund schools. Sonnenberg replied, “I am always concerned about education funding, especially in rural Colorado and have pushed for additional funding every year. My biggest concern is the failure of the legislature to prioritize education funding as we have seen in the past. My ballot initiative to reduce the state income tax is needed more now than ever as payments to government should not be a higher priority than food and shelter for the people of Colorado. Government needs to tighten its belt just like those that are without work or businesses that government forced closed. Several years ago the legislature expanded social programs that now are actually the biggest roadblock to education funding.”
But the facts don’t support his conclusion. Let’s say you earn the state average of roughly $75,000 per year. At Colorado’s current 4.63% income tax rate, you pay $3,472.50 in state income taxes per year. If this initiative is successful in lowering the rate to 4.55%, you would instead pay $3,412.50, which is a whopping $60 less. That’s not enough for an entire year of Netflix, by way of comparison, and certainly not enough to make a dent in annual grocery, rent or mortgage bills, but the loss of $150 million to the state budget hurts in ways everyone will see
On the other hand, if you make $500,000 per year, you currently pay $23,150 in state income taxes. Under this plan you would pay $22,750, a net haul of $400. While that would be a nice windfall for most of us, let’s admit that someone making half a million dollars a year likely doesn’t need an extra $400 as much as the rest of us. We already know what happens when you slash taxes to benefit the wealthy while leaving little for the rest of us. We need only to look at our neighbors to the east to see the devastating results. In 2012 and 2013, Kansas went on a tax slashing spree, conducting what then Gov. Sam Brownback referred to as “a real live experiment,” with his people’s lives–trying to prove that large tax cuts create an economic explosion that pays for the loss of revenue with increased earnings and thereby increased tax receipts.
Kansas’ experiment crashed and burned. The state’s job growth was sluggish from the moment the cuts passed, and state revenues plunged. A supermajority of both the GOP controlled Kansas House and Senate voted to restore tax rates enough to start to reverse the devastating cuts lawmakers had to make due to Gov. Brownback’s hubris, but the damage was done.
Despite my respect for Sen. Sonnenberg and his physical proximity to the great state of Kansas, I do not believe we should make Colorado Kansas again. I hope you decline to sign the petition for Initiative No. 306, and vote against it if it appears on your November ballot.
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