Amendment 66, Education, Rob Natelson, Taxes

Amendment 66 mutilates state constitution, enriches greedy bureaucracy

Colorado’s Amendment 66—the billion dollar tax hike—is a constitutional monstrosity.

Amendment 66 is, technically, not entirely a constitutional amendment. It is an unusual hybrid of constitutional amendment and change in the state tax law. The secretary of state refers to it as Initiative 22, and it is on the ballot this fall.

icon_op_edThe constitutional change would lock in a hugely-disproportionate share of state spending for a single program at the expense of every other Colorado service, public or private. The statutory change would impose a big hike in the state income tax.

As explained below, the costs across a wide range of areas—including public health and safety—could be immense.

But before we get to that, just think of how unfair this measure is:

Under its rules, everything else would take a back seat to the demands of the school bureaucracy.  Law enforcement would suffer. So would disaster relief, parks, the environment, services for the elderly, health care, our universities, not to mention economic investment and the taxpayers’ own needs.

Why? Because Amendment 66/Initiative 22 says that (with a sinister refinement explained below) the state school bureaucracy “shall, at a minimum, receive forty-three percent of sales, excise, and income tax revenue collected in the general fund.” In other words, it requires that we spend nearly half our state general fund for a single service before funding anything else!

And that 43% is only a floor. Amendment 66 demands even more. Here’s why:

* The 43% is in addition to what we pay in property taxes.

* The statutory part adds a steep income tax hike on top of that and gives all the revenue to the school bureaucracy.

* The 43% is calculated on what the older, lower tax rates would have brought in. But an income tax of, say, 20% yields less than 20% more revenue, because of disincentives and tax avoidance. So the 43% is calculated on the older, richer system, not on the newer, poorer one.

Now consider some of the other consequences:

*   Because of the 43% strait jacket, the legislature couldn’t freely reallocate existing revenue to new needs. For example, The Denver Post has reported that due in part to funding limitations for supervision, inmates released on parole often commit new crimes, including murder. Yet Amendment 66 would make re-allocating funds to parole supervisions that much harder, thereby endangering the lives and safety of Colorado citizens.

*     That means a primary way of allocating revenue would become more tax increases.

*    We would be crippled in adjusting school costs to reflect changes in technology or to promote educational accountability. Even if schools don’t do the job or are using money wastefully, they still get their guaranteed cut. This violates a basic principle of Anglo-American constitutionalism: agencies are responsible to the legislature for what they do with appropriated funds.

*    State income taxes would jump for everyone—by over 27% for everyone with a taxable income of more than $75,000, and 8% for everyone else.

*    And the cost of living would rise for every family in the state—including and especially the poor. This is because tax increases–even they seem to hit only the “rich”—have a way of seeping through an economy like venom. Almost everyone pays in the form of higher prices, lower incomes, and fewer jobs. A tax hike, like water, runs downhill.

*    Higher taxes also weaken the entire economy. Don’t be misled on this score: The studies show that the additional spending mandated by Amendment 66 is likely to harm much more than it helps.

*    The state income tax hike could wound Colorado’s economic competitiveness and kill Colorado jobs—a serious concern right now. Remember that we are in economic competition with other states and other countries, and several of our neighbors either don’t have an income tax or are cutting, reducing, or phasing out the income taxes they have.

* Colorado’s current tax may look like a flat rate, but because of the base on which it is calculated it is actually somewhat punitive as to income. Amendment 66 would make it much more so. Tax hikes like that have been shown to be particularly damaging to prosperity.

* Because the 43% guarantee is based on revenue from former, lower tax rates, the Amendment 66 insulates the school bureaucracy from the economic damage imposed by the tax hike.

A good constitution protects individual rights and structures government to serve the interests of all. But Amendment 66 mutilates our state constitution to privilege the greedy few. It transfers more money to the bureaucracy to do things that will hurt the general welfare, including the welfare of our children.

This violates every principle of good constitution-writing.

Addendum: Rob and Justin Longo discuss the destructive Amendment 66 in this iVoices.org podcast.

Rob Natelson is senior fellow in constitutional jurisprudence at the Independence Institute.  This piece originally appeared in the Institute’s constitution studies blog.

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