Income

Colorado Tax Measures – Prop. 121 and Prop. GG – pass

Colorado voters were set to approve Proposition 121 on Tuesday, cutting Colorado’s tax rate for the second time in two years.

At 11 p.m., the measure had a good cushion of 65% “yes” against 35% “no”.

As a result, the rate will drop from 4.55% to 4.4% from tax year 2022.

Nonpartisan legislative staff project that the rate reduction will reduce state tax revenue by $412.6 million in the 2023-24 fiscal year, which begins July 1, 2023. This would represent a reduction of approximately 2.4% of the general fund of the General Assembly.

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The general fund hit is likely to grow in coming years as wages increase.

Colorado has had a flat income tax — meaning the rate doesn’t change based on people’s income — since 1987. That means high earners will save more money if Proposition 121 passes.

In fiscal year 2023-24, Colorado taxpayers are expected to save an average of $119 under Passage Proposal 121. These savings drop to an average of $7 for people earning $14,999 or less and reach a average savings of $6,647 for people earning $1 million or more, who represent less than 1% of taxpayers.

Nonpartisan legislative staff estimate that about 75% of Colorado taxpayers will receive a tax reduction of less than $63 per year as a result of the passage of Proposition 121.

Proponents of Proposition 121, including Colorado Governor Jared Polis, a Democrat, say it will allow Coloradons to keep more of their money as they face rising consumer costs. “As costs soar for everyone, Proposition 121 is simply a great first step in giving money back to the people who deserve it most – the hardworking people of this state,” wrote Michael Fields, a Conservative tax activist, in a comprehensive notice from Colorado. document in support of the measure.

Opponents of Proposition 121 were concerned about how the measure will affect the state government’s ability to fund programs and services.

In years where tax revenue exceeds the Taxpayer Bill of Rights limit on government growth and spending, there will be no effect on the budget. But in years without a TABOR surplus, passage of Proposition 121 will mean state lawmakers will have less money to spend. The TABOR ceiling is calculated using inflation and population growth rates.

Opponents of the measure have also criticized how the measure will benefit the wealthy more than low-income Colorados. They prefer a code of progressive tax policy, where how much people pay is tied to how much they earn. “Tax cuts are tempting, aren’t they? But (are they a good) deal for you? Scott Wasserman, who directs the liberal nonprofit Bell Policy Center, wrote on Twitter. “You know who this is good business for? Millionaires and billionaires who will be just fine no matter what happens to our state finances. »

Brian Sundermeyer, a Republican voter from Colorado Springs, said it was difficult to decide how to vote on Proposition 121, though he ultimately voted “yes” on the measure.

“Lowering the level of income tax sounds great because you’re paying less and everyone wants that, especially in a current recession, an ongoing recession, or at least in these times of inflation,” he said. the 52-year-old defense contractor who served 17 years in the military. “However, it takes money to make things work in government. Getting out of the military isn’t cheap.

He added: “It costs a lot of money to do the things that we did well in the military. You can’t want to pay nothing and think it’s all still provided.

The GG proposal also passes

On Tuesday, Colorado voters were also expected to approve the GG proposal, which would require the state to more prominently display detailed information about how citizen-initiated ballot measures changing the income tax rate would affect Colorados in .

At 11 p.m., the measure had a good cushion of 71% “yes” versus 29% “no”.

When an initiative to change Colorado’s income tax rate passes statewide, a chart outlining how the change would affect people at different income levels is shared in the information booklet on the state ballot — also known as the blue book — which is mailed to every voter.

The table includes the average income tax owed by people at different income levels, as well as how much their taxes would rise or fall if the rate were changed.

The GG proposal will require the table — with some slight modifications — to also be included in petitions used to collect signatures for income tax changes on the ballot, as well as ballots.

The slight changes include only the specification of eight categories of income tax and more specific information on how the income tax changes would affect individual taxpayers.

The GG proposal, which was returned to the ballot by the legislature, comes as Colorado Democrats try to find ways to work on tax policy within the confines of the taxpayer bill of rights.

The GG proposal is an expansion of legislation passed by Democratic lawmakers in 2021 requiring tax-cutting ballot measures to include an explanation of how much revenue would be cut and which programs would be most affected. The 2021 bill also now requires ballot initiatives raising taxes to explain how the new revenue would be spent.

In fact, the 2021 bill is why there’s a chart in the blue book explaining how people in different income brackets would be affected by tax rate changes.

Who funded the ballot measures and their opposition

Several committees have declared support or opposition to the 121 and GG proposals:

  • Coloradans for Ballot Transparency has raised approximately $1.4 million and spent $984,000 to support the GG proposal through October 26. The nonprofit Liberal Sixteen Thirty National Fund was the group’s largest donor with $500,000. The Colorado Sun calls the Sixteen Thirty Fund a black money group because it is not required to disclose its donors.
  • Colorado Character spent $545,000 to get Proposition 121 on the ballot. Most of his money came from the conservative nonprofit organizations Defend Colorado and Colorado Rising Action.
  • Keeping Colorado Great has spent $290,000 to oppose Proposition 121, while raising $295,000 through October 26. The National Education Association gave the committee $250,000 of its money.
  • Coloradans Coming Together, created in the final weeks of the campaign, raised approximately $77,000 to oppose Proposition 121 and support GG.
  • The Great Education Colorado Issue Committee, funded by education unions, spent nearly $160,000 supporting GG and another measure, Proposition FF, while opposing Proposition 121.
  • The Americans for Prosperity Issue committee has spent more than $35,000 supporting Proposition 121.
  • Path to Zero, funded by the libertarian nonprofit think tank Independence Institute, spent about $9,000 supporting 121.

This is a developing story that will be updated.

Colorado Sun writer Olivia Prentzel contributed reporting from Colorado Springs.