Today we released a new report analyzing Colorado's Amendment 66, an initiative on next month's ballot that will raise income taxes by almost $1 billion per year.
Highlights from our report:
- All taxpayers would see their 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. bill go up, as what is currently a flat 4.63 percent rate on all income would become 5 percent on the first $75,000 (an 8 percent increase), and 5.9 percent on income above that (a 27 percent increase).
- The tax increase will directly hit the 95 percent of all Colorado businesses that pay taxes through the 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. code. These firms employ 57 percent of all Coloradans, and nationwide, create 64 percent of new jobs.
- Academic evidence strongly suggests that higher taxes, especially income taxes, are associated with lower economic growth and job creation. There is little evidence that taxes have "little influence" (to quote the proponents) on state economies.
- 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 Internal Revenue Service (IRS), over 37 percent of Coloradans have an adjusted gross incomeFor individuals, gross income is the total pre-tax earnings from wages, tips, investments, interest, and other forms of income and is also referred to as “gross pay.” For businesses, gross income is total revenue minus cost of goods sold and is also known as “gross profit” or “gross margin.” 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 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.
- Raising taxes will not encourage continued post-recessionA recession is a significant and sustained decline in the economy. Typically, a recession lasts longer than six months, but recovery from a recession can take a few years. economic recovery, especially in those areas of the state still struggling to realize economic gains.
Check out the full report here!
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