As the legislature struggles to balance the budget and fill in a $1.1 billion shortfall, it is time for the citizens of Colorado to step forward and raise some taxes.
It would take a vote of the people to raise our income taxes and sales taxes, but Coloradans are some of the most undertaxed people in the nation and it is time to bite the bullet. Seven hundred thousand people have moved to Colorado since 2000, the year after the income rate was lowered to 4.63 percent. Perhaps they might be open to raising it to 6.25 percent for the highest income taxpayer to see this budget crisis start to go away. It is time to ask them.
I lived for three years in Texas, where the income tax is zero, and taxes were still high. I kept my house in Pueblo and bought a comparable house in Fort Worth. Property taxes were triple what they are in Pueblo. None of the local property tax revenue goes to the state budget. According to The Tax Foundation, even with the Taxpayer’s Bill of Rights (TABOR), Colorado ranks 21st in property taxes. But Texas ranks among the highest in the nation.
We have attracted new people to our state even though we have a state income tax. It is time to test the waters with raising those rates. Most other states have graduated rates so that lower-income families pay low rates. Perhaps we could adopt a system like Maryland, where the rate stays at 5 percent until the family income reaches $150,000. Then it steps up 6.25 percent for individuals making $1 million in income.
I do not have children, but I am very willing to pay these increased taxes for better schools in my community. It is an investment in the future.
In addition to the income tax, it is time to look at putting an increased sales tax on the ballot. Sales taxes are assessed by every state except Alaska, Delaware, Montana, New Hampshire and Oregon. Our 2.9 percent state sales tax is among the lowest in the nation. For those who do not consume, they do not pay.
The argument against raising the state sales tax to 4 percent is that it hurts the poor. The solution is to allow an income tax credit to compensate poor households. This happens in Hawaii, Idaho, Kansas, Oklahoma, South Dakota and Wyoming. That way we can raise revenues without hurting the poor.
I know people who feel that they are taxed enough already. Many of them do not have children in school, so they do not see the urgent need to fund public education. They don’t want to raise taxes in the middle of a recession. I disagree. I think now is the time that we need to raise taxes, because the legislature’s Joint Budget Committee has cut as far as it can.
Now we are in a fiscal emergency and it seems to me we need all hands on deck. However, I don’t see a need to tax services. A tax on goods would raise the revenues we need.
Colorado could sunshine the state sales tax. There will be a time when the economy will be humming again. We can get ahead of the curve.
Gov. John Hickenlooper has a history of selling tax increases to the citizens of Denver. It is just a matter of time until our salesman-in-chief is going to be on the campaign trail selling it to the people of the state. We might as well get used to it now. With broad public support, we can make Colorado a shining example where others states are struggling with budget deficits.
Like Referendum C in 2005, we need to be think about a bipartisan ballot initiative to phase in a graduated state income tax and to raise our state sales tax. Sure, we still need to find places to cut. But by also nudging taxes higher, we can show the nation how well we can balance our budget without cutting services.
David A. Becker (evadgorf@comcast.net) of Pueblo is a reviewer of religion books who runs an Internet bookstore.
