It抖阴ap a truism of American politics: Conservatives want to cut taxes, right?
Well, no. Not this year. Not in Colorado.
There鈥檚 an initiative on the November ballot that would change Colorado鈥檚 flat-rate state income tax to a graduated income tax. The new graduated rate scale in Amendment 87 would mean a reduction in state taxes for just about everybody; 97% of Colorado taxpayers and 95% of businesses would pay less under the plan.
So those principled conservatives who argue for cutting taxes must be delighted with a broad-based tax cut like that, right?
Well, no. The conservative chorus — Fox News, The Wall Street Journal, right-wing think tanks, and now The Denver Post — is united in opposition to this far-reaching tax-reduction plan. They don鈥檛 like this tax cut for the many because the new graduated rate scale would raise taxes for a few.
鈥淐olorado progressives hike the tax slope,鈥� the , weighing in on the issue before it even had an amendment number, complaining that the new tax structure is designed 鈥渢o soak the rich鈥� and 鈥渕ake Colorado more like California and the high-tax states.鈥�
Even Colorado鈥檚 Independence Institute, a determined fighter for lower taxes, has called the tax cut in Amendment 87 鈥渇atally flawed.鈥�
The problem, for these 鈥渃onservatives,鈥� is that, while Colorado鈥檚 tax cut would help almost everybody, the benefits would go to the wrong people. Under Amendment 87, the lower rates would apply to ordinary wage earners 鈥� teachers, nurses, firefighters, roofers, retail clerks, secretaries, soldiers, ski patrollers. Anybody making less than half a million dollars per year would pay less.
To offset that drop in revenue and raise at least two billion dollars more for education and healthcare, the graduated income tax would raise rates for the 3% of Coloradans earning more than $500,000 per year — people like business owners, venture capitalists, and nepo kids drawing interest from a trust fund.
These are the folks who can most afford to pay for state services — but they are also the people who contribute to right-wing think tanks and buy the $20 million homes advertised in the Wall Street Journal. So an increase in taxes for this tiny cohort is unacceptable, even if it means lower taxes for everybody else.
The conservatives have an argument. They say that an increased income tax rate for the highest earners would damage the state鈥檚 economy, because it would prompt rich entrepreneurs 鈥� the job creators, the wealth creators 鈥� to leave Colorado and move to low-tax jurisdictions. So the new rate scale would actually cut state revenues. It抖阴ap a familiar assertion; this is what oligarchs everywhere say whenever they face higher local taxes.
Would that happen? Would a family earning $3 million per year yank their kids out of school, wave goodbye to their friends, leave their slope-side mansion in Aspen or Telluride, and move to Florida or West Virginia because their income after state taxes is dropping to a measly $2,748,000? As Eliza Doolittle famously said: 鈥淣ot bloody likely.鈥�
In fact, there are excellent studies showing the impact of income tax hikes on the rich.
In a comprehensive review of several of these reports, the concluded that 鈥淪tate income tax increases on wealthy people have not led to substantial numbers of them to move to lower-tax states.鈥� And states that have enacted 鈥渕illionaire taxes鈥� have seen steady growth, not declines, in revenue.
Massachusetts, for example, added a 4% surtax on incomes over $1 million 鈥� just about the same hike as that proposed in the Colorado initiative鈥攊n 2022. Today, Massachusetts has more millionaires, by net worth, than when that tax hike took effect. Revenues from the surtax have come in above the initial estimates, and have risen, not fallen, over the years.
Critics of the surtax note, accurately, that , with many going to warmer states. Is that because of a tax hike, or because some driver stuck in a snowbank during a frigid Boston blizzard saw a picture on his phone of sunbathers on a beach in Miami on the same day?
The Independence Institute鈥檚 opposition to the graduated rate scale involves the idea of 鈥渂racket creep.鈥� Yes, the opponents say, you will get lower taxes now, but over time your income could creep up to the point where your tax rate goes up. But 鈥渙ver time,鈥� in this case, is a long, long time. If you鈥檙e now making $100,000, and your pay goes up 10% annually 鈥� three times the rate of inflation 鈥� you won鈥檛 creep into a higher tax bracket until 2044.
In addition to the broad-based tax relief, switching to a graduated tax rate is a more equitable way to raise revenue. It抖阴ap just fairer to ask those who have more to pay more for the schools, roads, parks, and police we all use. And asking a few plutocrats to pay more in state taxes for the benefit of all will (slightly) offset the huge disparity in wealth that is one reason for our country鈥檚 bitter divisions today.
That抖阴ap why the vast majority of American states and nations, including the United States, that have an income tax have adopted graduated rates. President Donald Trump noted this benefit in his book The America We Deserve (2000). 鈥淥nly the wealthy would reap a windfall鈥� from a flat-rate income tax, he wrote, 鈥渂ecause a flat-rate tax would shift the burden 鈥� to those in the lower brackets.鈥� That抖阴ap the problem with Colorado鈥檚 current state income tax; the burden is on the wrong Coloradans. This November, we can fix that problem.
In sum, the graduated-rate in Amendment 87 would make the income tax more equitable, and would provide a tax cut to just about everybody in the state. Conservative tax-cutters must be lining up to support that. Right?
T. R. Reid, of Denver, 聽is the author of A Fine Mess: A Global Quest for A Simpler, Fairer, and More Efficient Tax System.
