(You can listen to this column, read by the author, here.)
It’s time for voters to permanently lower the state income tax. Again.
Since the legislature won’t do it, I’ve just filed another citizen’s initiative to force the issue. This will be my third tax cut time at bat.
My first was in 2020. It took our flat 4.63% income tax rate to 4.55%. It didn’t take a penny away from any state program because the state was perpetually running a surplus over our constitutional limit. So, the money would constantly have to be refunded anyway.
Gov. Jared Polis supported this ballot measure and it passed by a massive 58% to 42%.
My second was in 2022 and took the rate to 4.4%. Again, it didn’t take a penny away from any state program because (again) the state was perpetually running a surplus over our constitutional limit, and the money would constantly have to be refunded anyway.
Polis supported this ballot measure too and it passed by a mind-boggling 65% to 35%. It passed in EVERY county in Colorado, sans Boulder (email your favorite Boulder joke to JonCaldara@gmail.com).
Note to legislators: the people you represent want their taxes cut, by a 30% margin. That should matter to you.
My third attempt will take it to 4.25%. And to sound like a broken record (a metaphor that streaming music services will make obsolete), it won’t take a penny away from any state program because the state is running surpluses, blah, blah, must be refunded anyway.
In his State of the State address, Polis not only called for lowering the state income tax, but he also wisely called for ending it all together. So, I’m guessing he’ll endorse this one too.
All I’m doing here is following the playbook written by former Gov. Bill Owens. See if you can follow his highly complex, multi-layered and sophisticated thinking on this one:
When faced with what was going to be continual budget surpluses, which would trigger constant yearly refunds back to taxpayers, then Governor Owens decided it made no sense to collect taxes just to give the cash back.
So, he cowboyed up and worked with the legislature to step the income tax down from 5% to 4.63% in the early 2000s.
Oh wait. Maybe that wasn’t complex, even in the slightest.
To his credit, Polis realizes the same thing. And he knows the situation for taxpayers is more dire than in Owens’ day due to inflation.
The main motivation behind last year’s $750 “cash back” checks was, duh, an election ploy. Let’s recall if Jared and team had their way and passed Proposition CC a couple of years before there’d be no surpluses to refund ever, and forever.
But Jared’s stated motivation for the sending out the checks was valid. With inflation raging, families need that money soon, not a year later when that money is worth a lot less after inflation. And lowering the income tax does just that. Your employer withholds money from your paycheck based on tax rates. Lowering the tax rate increases your take-home pay immediately.
By the way, lowering the tax to 4.25% is the most conservative estimate of what the ongoing surpluses are going to be. That estimate comes from the Office of State Planning and Budget.
But, if I were to use the numbers provided by the Legislative Council Staff, we could safely reduce the state income tax all the way down to 3.95% without endangering any current spending!
Stew on that a bit. That is how much cash is sloshing around the Capitol.
Because of the technicalities of insane Colorado law, while I can get this tax cut started in 2023, it can’t be on the ballot until 2024. But, and you’re gonna love this one, if I added a tax increase to it, it could go on the ballot this year.
Oh, and then there is the small matter and immense cost of gathering some 125,000 valid signatures to get it on the ballot, which only people who haven’t done it think is easy.
Of course, Polis could spend some of his preposterously abundant political capital and drag his intransigent legislature to cut our taxes now. That would also compete with nearby states like Arizona at 2.5%, and Wyoming, Nevada, South Dakota and Texas with no income tax at all.
Oh, and deliver inflation relief to Coloradans, if that matters to anyone.
Jon Caldara is president of the Independence Institute, a free market think tank in Denver.
