Proposition 116 Will Reduce the Income Tax Rate for all Taxpayers
Colorado used to have a success-punishing progressive income tax where people and companies would pay a higher tax rate the more money they earned. The legislature was convinced to switch to a more equitable flat tax in the mid-1980s. The legislature set the new rate at 5%, which created a windfall to the state coffers.
The flat income tax did as predicted; it lit the engine of Colorado’s economy. When productive people and their companies are looking to locate, they are attracted to states with low and stable tax policy.
The flat tax began the Colorado boom.
That boom resulted in massive tax receipts to the state. So much so that the legislature quickly felt the growing pressure of a tax rebellion. They passed the Arveschoug-Bird Amendment to limit spending to 6% yearly growth. But that didn’t quell the anger over how much money the state was raking in. So, we then passed the Taxpayer’s Bill of Rights (TABOR) in 1992.
The combination of our flat tax and TABOR attracted more and more businesses and jobs to Colorado. So much so that in the late 1990s the state had to refund some $3.2 billion of surplus tax revenue to taxpayers.
Under Gov. Bill Owens the legislature in the 2000s lowered our flat tax to the current 4.63%.
The combination of our flat-rate income tax and TABOR has made for a sustainable gold rush which has turned Colorado into one of the most economically vibrant states in the country with one of the lowest unemployment rates.
One need only look to New York and now California to see what a progressive tax structure does. Businesses and people flee. Where are employers going? Low-tax states such as Texas, Florida, even Wyoming. These states have NO income tax at all. That’s what we’re competing with.
No wonder as candidate for governor Jared Polis said he wanted to lower the flat income tax rate. He should do just that.