Many people are beginning to wrap their minds around the House Republicans’ proposed destination-based cash-flow tax and what it means for tax reform. Most people are still looking into the tax’s impacts on trade and how...
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- Colorado Amendment 66 Increases Tax Rates on Low- and Mid...
Colorado Amendment 66 Increases Tax Rates on Low- and Middle-Income Coloradans
Tomorrow, Colorado voters will decide on Amendment 66, which would move Colorado from one of the eight states with a single-rate individual income tax to one that has a graduated rate structure. Currently, the state’s income tax rate is 4.63 percent on all income levels. Amendment 66 would increase the tax rate on income less than $75,000 to 5.0 percent, while taxing income above $75,000 at 5.9 percent.
Coloradans of all incomes would see a rate increase. Those with taxable income below $75,000 would see an 8 percent increase in rate. Coloradoans with more than $75,000 in taxable income would see a 27 percent increase in their top rate.
An 8 percent increase may seem insignificant, but it leaves less money for households to purchase essential goods and services—especially lower-income families. This is best demonstrated by a few examples, which we outlined in our recent report on the amendment:
- Proponents of Amendment 66 argue that a person making $30,000 per year will pay “about $4 per month” more in taxes, or the cost of “an ice cream cone.” At this income level, the additional $4 a month in taxes from Amendment 66 is better characterized as one less meal, not one less leisure good (such as an ice cream cone).
- Similarly, a taxpayer earning $50,000 annually will pay an additional $9 per month, which supporters equate to “a burrito with extra guac [sic].” In truth, this amounts to an additional $108 per year, on average, or roughly the cost of heating a typical Colorado home for one month during the winter.
- According to the IRS, over 37 percent of Coloradans have an adjusted gross income of less than $25,000. A family earning this amount would pay an estimated $31.08 in additional taxes, which is equivalent to the average cost of feeding a one-year-old child a healthy diet for one week.
- Finally, a two-earner, two-child household, with each parent earning $57,000, would see an estimated annual tax increase of $393, or roughly the cost of the employee portion of one month of family health insurance coverage. Similarly, a person earning $40,000 would see an approximate tax increase of $82 per year, or roughly the cost of a worker’s portion of one month of employer-provided health insurance.
Higher individual income taxes would further reduce the take-home pay of low- and middle-income Coloradans, adding a second round of austerity to already cash-strapped households.
More on Colorado here.
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