DENVER — Fresh off the heals off a voter-passed reduction in the state income tax, the proponents of Proposition 121 — the 2022 ballot measure that lowered Colorado’s flat income tax rate from 4.55 percent to 4.4 percent — are at it again.
Jon Caldara, President of the Independence Institute,* a free market think tank in Denver, is continuing what he has dubbed a “path to zero” plan to eventually eliminate Colorado’s income tax by filing two more initiatives for the 2024 election to lower the income tax rate yet again.
One would option filed would take the rate to 4.35 percent effective for tax years beginning Jan. 1, 2025. The other would take that down even further to 4.25 percent, also effective for tax years beginning Jan. 1, 2025.
Caldara said he and his co-proponent, Ben Murrey, the director of fiscal policy for the Independence Institute, would decide later which option they believe is the best route. Caldara added this is about helping Coloradans understand the Taxpayer’s Bill of Rights (TABOR) and what it really means.
“All this does is cut into our refunds,” Caldara said. “This is just another way of refunding our surpluses.”
Caldara also noted that both of his previous tax cut measures (the first in 2020 which took the tax rate from 4.63 percent to 4.55 percent) were supported by Gov. Jared Polis, but that the Democrat-controlled legislature continues to ignore the message from voters that they want lower taxes. Most recently Democrats in the House of Representatives killed House Bill 1063 which would have reduced the state income tax rate to the 4.25 percent without taking it to the voters.
“The people they represent have said twice they want their taxes cut by a large margin,” Caldara said (Prop 121 passed by a 30 percent margin to be exact), adding that it’s not affecting the budget because it’s just lowering the surpluses that TABOR requires the state to refund, 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.”
Caldara added these two measures don’t even come close to what the tax rate could be reduced by before it would cut into the non-TABOR revenue.
The Legislative Council Staff projections are that the income tax rate could be lowered to 3.95 percent without cutting into the current budget, Caldara said.
“The Chicken Littles out there are going to scream the sky is falling,” Caldara said. “That is basically a bald-faced lie.”
Caldara does not appear to be the only one thinking about tax reduction. Three other income tax cutting initiatives have also been filed with the state. One version would take the rate to 4.25 percent and promises not to reduce revenue for the departments of education, health care policy and financing or corrections. One would take the rate to 4.25 percent without any promises. And one would take the rate to 4.33 percent and promises that any reduction in state revenue would be divided equally among the departments of revenue and personnel.
Those measures were filed by former Deputy Secretary of State Suzanne Taheri and former Arapahoe County Commissioner Steven Ward. It is unclear when Taheri and Ward’s tax cuts would take place. The documents state after Jan. 1, 2024, but the initiative cannot be voted on until November of 2024. The effective date will likely be hashed out in their review and comment hearing, which is scheduled for 10 a.m. on March 3.
Caldara’s initiatives have already gone through the review and comment hearing and are now headed for the title board. After a title is set, Caldara said they will begin to gather signatures. They will need 124,238 signatures from registered voters to send it to the ballot.
“As families in Colorado are struggling with inflation, the state shouldn’t withhold surplus tax revenue when working folks need it the most,” Caldara said. “The sooner the income tax is lowered, the sooner payroll withholdings are reduced, take-home pay goes up, and families have more to spend at the store.”
*Independence Institute is the publisher of Complete Colorado
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