Colorado voters will see a hefty taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. hike on the ballot this November–a $950 million tax hike, to be exact. And that's just in its first year. Amendment 66, formerly Initiative 22, would change Colorado's individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. from a single rate of 4.63 percent on all income levels to a two-bracket system. Incomes under $75,000 would pay 5.0 percent; incomes over that would face a rate of 5.9 percent. That's a 27 percent increase in top rate. The measure would put the increased income taxes towards higher education funding throughout the state.
The Colorado branch of the National Federation of Independent Business conducted a poll of member business owners within the state and found low support of such a tax measure. Ninety-six percent of poll participants said they opposed the amendment.
A majority of firms within Colorado are what we call "pass-throughs" because their business income tax is "passed through" to individual owner, rather than paid by the actual business entity itself. According to a 2011 Ernst and Young study, 95 percent of firms in Colorado are pass-throughs. Amendment 66 would raise taxes on all of them.
It's easy to point to higher-income taxpayers and say that they should be paying more but it's important to remember that a lot of those "higher incomes" are businesses filing through the personal income tax. After-tax incomeAfter-tax income is the net amount of income available to invest, save, or consume after federal, state, and withholding taxes have been applied—your disposable income. Companies and, to a lesser extent, individuals, make economic decisions in light of how they can best maximize after-tax income. for these individuals isn't simply take home pay. It's money that is reinvested back into their firms, further contributing to Colorado's economy.Share