Coloradans may be voting this November on a proposal to raise billions of dollars annually by hiking taxes on the rich and using the money on schools and other, unspecified needs of a “growing population and changing economy.”
An issue committee that calls itself Fair Tax Colorado announced Thursday that it will begin collecting signatures to place its proposal, titled Initiative 271, on the 2020 ballot. They’ll need at least 124,632 of them to qualify for the ballot.
Colorado currently has a flat, across-the-board state income tax rate of 4.63%. Initiative 271 would lower the rate to 4.58% for every person making up to $250,000.
It would compensate for the loss in revenue from the tax cut by requiring everyone earning at least $250,000 to pay a 7% income tax rate on their federal taxable income after the first $250,000 and up to $500,000.
Anyone earning more than $500,000 would then pay a 7.75% rate on their income above and beyond the first $500,000, and up to $1 million. Finally, for anyone earning more than $1 million, the measure proposes to tax them $67,700 plus 8.9% of all federal taxable income above and beyond the first million.
“We think it’s worth bringing (Initiative 271) because it’s a tax cut for 95% of Coloradans,” said Abby Vining, director of Fair Tax Colorado. “We know that middle-income households pay more of a percentage of their income than the wealthiest households. This measure reverses that and creates a fair tax code.”
Backers project the measure would bring in an extra $2 billion a year for the state. Initiative 271 proposes to earmark $1 billion of that for educator pay raises. The rest would go into the state’s general fund to pay for various needs that could include transportation, housing and water resources.
“We want to have flexibility” in how the general fund money is spent, said Tyler Jaeckel, the Bell Policy Center’s director of policy and research.
The proposal is the result of months of brainstorming by progressive groups that want to see progressive taxation in Colorado, including Bell, the Colorado Fiscal Institute and Colorado People’s Alliance, according to Jaeckel. The Colorado Education Association, Great Education Colorado and Together Colorado are also part of the coalition.
Vining said Fair Tax Colorado will use volunteers to gather the necessary signatures. “We’re developing a plan based on working with the people who worked on Amendment 73,” a $1.6 billion tax hike for education that failed at the ballot in 2018.
If Initiative 271 qualifies for the ballot, it may go up against another tax measure. GOP state Sen. Jerry Sonnenberg of Sterling told The Denver Post that he and Jon Caldara of The Independence Institute are in the process of developing a ballot measure to cut Colorado’s flat income tax to somewhere in the range of 4.5% or 4.55%.
“We’re still trying to figure out what this looks like,” Sonnenberg said. “But I do think we will file something.”
He said of Initiative 271: “Obviously, they want to stifle economic growth in Colorado, and take money out of Colorado, by thinking that people who provide jobs actually have extra money to fund those that want free stuff.”