Do progressives hate the poor?
Just look at who’s backing and opposing the different ballot questions this year. The left wants the poor to pay a larger percentage of their income in taxes than the wealthy.
It’s a little bit odd given all their jawing about social justice.
In full disclosure, I am the proponent of Proposition 116, which would lower our state’s income tax rate from the current 4.63% to 4.55%.
This is a very small tax cut for everyone. Since Colorado has a flat-rate income tax, everyone would get the same tiny tax cut, including horrid rich people.
Even though Gov. Polis supports this rate cut, the usual mob of tax-happy leftist groups have their panties in a bunch over Prop 116 and have asked Polis to rescind his support.
Their leading argument against 116? The wealthy also get this small tax cut. Instead they want a tiered, progressive income tax to punish the rich.
Only problem, their wish is already reality.
Out of all the types of taxes Coloradans pay, and there are many, our flat income tax is the only one that turns out to be progressive, costing the rich more than the poor.
This seems counter-intuitive at first. But remember Colorado’s income tax is based off your federal “taxable income,” taken from your federal tax form. Thus, your “income” is lowered by federal deductions and benefits like the Earned Income Tax Credit. That greatly impacts the level where you start paying any income tax at all.
So, people on the lower end of the income scale pay next to nothing in Colorado income taxes while those making a lot pay a lot more.
The Colorado Department of Revenue puts out a “Tax Profile” report telling us who pays how much in all of Colorado’s myriad of taxes. And here’s the punchline — out of ALL our different taxes (income, sales, property, gasoline, etc.) only ONE of them is progressive, costing rich guys more than poor guys. Our flat income tax.
All other state and local taxes are regressive, costing the poor proportionally more no matter how you slice it.
(WARNING: Numbers ahead. We’ll get through them. Like vegetables, you gotta have them sometimes)
For those who earn $15,000 and less, only 4% of all the state and local taxes they pay is in income tax. For middle-income people making $50,000 to $70,000, their income tax costs them 29% of their total tax burden. And for folks making over $200,000, it costs them a gob-smacking 46%.
Or if you want to look at it as a percentage of all the dough the state takes in from income tax, it breaks out this way: Those who make less than $15,000 put in only 0.3% of all the income tax collected. For those making $50,000 to $70,000, it’s 8.1%. And for those making over $200,000, it’s 44%.
Or if you want to look at state income taxes as a percentage of a taxpayer’s income: Those making under $15,000 pay an effective rate of 0.83%. Those $50,000 to $70,000, 2.63%. And those making over $200, 3.16%.
The rich pay nearly four times the effective rate of the poor! A progressive dream.
The point is, if you want to soak the rich, Colorado’s flat tax rate is doing it, from every angle.
According to the Dept. of Revenue, it’s all the other taxes that disproportionately screw the poor:
• Property taxes (7.91% effective tax rate for the lowest bracket, 2.14% for the top).
• Sales tax (7.72% effective rate for poor, 1.38% for rich).
• Gas tax (0.96% vs. 0.09%).
• Tobacco tax (0.51% vs. 0.01%), and so on.
There are four measures on this fall’s ballot that will change what people pay in taxes. Proposition 116 keeps intact what is in reality the state’s only progressive tax.
The remaining three measures expand highly regressive, anti-poor taxes.
Amendment B repeals the Gallagher Amendment and will result in rising residential property taxes. According to the state’s Department of Revenue (above), poor people proportionately pay 3.7 times more in residential property taxes than the rich.
Proposition EE raises taxes on tobacco and vaping products. Poor people proportionately pay 51 times more in tobacco taxes.
Proposition 118 will raise payroll taxes. Poor people pay proportionally the most with payroll taxes.
Thank God the social justice progressives pushing all those tax increases are working to make life better for the poor!
Jon Caldara is president of the Independence Institute, a free market think tank in Denver.