COLORADO SPRINGS — This November, Colorado voters will be asked to cut the state’s flat income tax rate from 4.63% – 4.55% in Proposition 116.
Incomprehensible terms, it’s a reduction of about $8 per $10,000 of taxable income if passed. The ballot information Blue Book reports the average tax savings of about $37.
“The average Coloradan is going to see less than a dollar a week,” said Chris Stiffler, an economist with the Colorado Fiscal Institute. “It’s not like it’s a big stimulus package for middle income or low-income folks that are really hurting.”
The Blue Book estimates the hit to state revenue at $154 million by the 2021-2022 fiscal year. Supporters of the tax cut say, it’s minimal compared to the rate at which Colorado grew in the years previous to the pandemic.
“It’s not fair to say well, where are we going to pay for this $160 million a year when on average, we’ve increased revenues by $500 million per year,” Director of the Fiscal Center at the Independence Institute Ben Murrey said.
Murrey explained combined for a two-income family, the tax increase could be over $100 in a year.
Stiffller said the tax decrease is a big giveaway for the richest people in the state and worries it comes at the expense of further cuts to education.
Fair Tax Colorado say $154 million is about the cost of 18,100 students to go to school.
Opponents point to cuts already made to Colorado’s General Fund this year as a reason not to go further right now.
“Overall, a broad rate cut is not the best way to target relief,” Stiffler said.
Murrey disagrees and says Democratic Governor Jared Polis does as well, quoting a message Polis sent to the Independence Institute saying “An income tax cut is broad based relief and not only helps families get by in a challenging time and also helps our economy grow.”
“I couldn’t agree more,” Murrey said.