• Democrats and unions try to kill Colorado’s flat tax.

    Colorado has veered to the political left in recent years, and on November 5 it may take another leap toward California. The Democrats and unions who now run state government are promoting a ballot initiative that would raise taxes and unleash a brave new era of liberal governance.

    The Colorado Tax Increase for Education, or Amendment 66, follows the well-trod union script of claiming to raise taxes in the name of better schools. Its real purpose is to repeal restraints on tax increases and open the door to even higher taxes and more spending on everything.

    The referendum would repeal the state’s current flat income-tax rate of 4.63% that liberals loathe because raising it requires raising taxes on nearly all Coloradans. And sure enough, Amendment 66 would raise the rate to 5% on income up to $75,000, and to 5.9% on all higher earners. That’s a 26.6% tax increase on anyone making more than $75,000 a year.

    That’s also a $950 million revenue increase for politicians in the first year alone, but the real prize is down the road. Once a graduated tax code is in place, unions and Democrats will try again and again to raise tax rates on “the rich.” This has happened everywhere Democrats have run the show in the last decade, from Maryland to Connecticut, New York, Oregon and California. Within a decade, the top tax rate will be closer to 8% or 9%.

    Colorado’s liberals may aspire to join the left coasts, but that won’t make the state any more competitive in its interior U.S. neighborhood, where states like Kansas and Oklahoma are cutting tax rates. High-tax states created one net new job for every four in states without an income tax from 2002-2012, according to a study for the American Legislative Exchange Council.

    Polls show that the main issue for Colorado voters now is the economy. That’s not surprising given that household incomes in Colorado remain 7.2% below pre-recession levels, according to Census Bureau data. A 2011 study by Ernst & Young found that more than half a million small businesses in Colorado, or 92% of all in-state businesses, pay taxes at individual tax rates and thus would face a tax increase under Amendment 66.

    The sales pitch is that this tax windfall is earmarked for education, but if you believe that you must be a college professor. Amendment 66 states that “at least 43% of state sales, excise and income tax revenues” must be spent on education. The main result would be to make spending on education untouchable in the future and to make it harder for politicians to set priorities.

    Unions know that money is fungible, so a tax increase earmarked for education means that other revenue can be used to delay reform in the state’s badly underfunded public teacher pension plan. Funding for Medicaid, roads and other state priorities won’t decrease, so earmarking more for education would increase pressure for another tax increase. It’s no accident that Amendment 66 states that “all tax revenues attributable to this measure to be collected and spent without future voter approval.”

    The language of Amendment 66 also includes no reforms in return for the new cash—no teacher accountability, no increase in school choice, and no pension reforms. Supporters say it would allow for implementation of a state legislative reform, but unions are already trying to block that.

    The initiative is also an attempt to bail out Denver schools by taking more cash from the rest of the state. For every $1 the scheme would take from suburban school districts, such as Jefferson and Douglas counties, the state would send back 50 to 60 cents, according to the state treasurer’s office. The state funding formula already encourages counties to raise property tax rates in order to get more state cash, so this tax increase will only be round one.

    A new study by the University of Colorado Leeds School of Business found close to zero relationship between changes in per pupil spending on Colorado schools and changes in test scores and graduation rates. It notes, for example, that “although Cotopaxi School District received nearly a 36% increase” in per pupil funding from 2007-12, the highest in the state, “its test scores dropped by 8.3%.”

    As recently as 2011, Colorado voters voted down a state sales and income-tax increase, but the unions keep coming. And it’s no surprise they’ve already put $2 million behind Amendment 66. If it passes, they know they’ll get a big return on that political investment for decades to come. If it does pass, we’ll also know that millions of Coloradans have taken to smoking that marijuana they legalized last year.


    Posted by Dana West @ 5:36 am for Colorado politics, Editorial, Education, Elections, Issues |

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