Last month, Colorado passed Proposition 116, which will lower the current flat state income tax rate of 4.63% to 4.55%. Supporters of the measure said that Coloradans needed relief from the economic fallout of the coronavirus pandemic, but this regressive, shortsighted tax cut will end up doing more harm than good.
Amidst an economic recession created by the pandemic, it’s understandable why Coloradans struggling to make ends meet voted in favor of a ballot measure that would seemingly ease their financial hardships. Unfortunately, all it does is give an unnecessary handout to wealthy individuals at the expense of our schools, roads, and health care.
Proposition 116 will lead to funding cuts for many important public services while providing pocket-change-level savings for most working families. The only people who really end up ahead are rich people like us.
According to an impact analysis put out by the Colorado legislature, a person making $50,000 a year will only save $40 annually, and those who make $100,000 a year would only save up to $80. For the average family, this barely makes up a week’s worth of groceries, let alone any significant form of economic relief.
That money comes at a cost. According to the same analysis, the proposition will reduce state services by an estimated $78.1 million for the current year, and by $158.4 million for the 2021 fiscal year.
A loss of nearly $160 million of state revenue hurts everyone, especially low- and middle-income families who rely on state services to assist them. Earlier this year, when we faced a $3.3 billion shortfall, our state government cut K-12 education by $621 million, higher-education programs by $598 million, and programs like transportation and health care faced similar cuts. Furthermore, Colorado is likely to face a $1 billion deficit next year.
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Despite Proposition 116 having passed, the fight against tax cuts for the rich is far from over.
As Coloradans usher in newly elected state representatives, we have an opportunity to offset the negative consequences of the measure. Moving forward, we must demand that elected officials enact policies that require Colorado’s wealthiest to pay their fair share.
One-size-fits-all tax plans, like our flat tax, don’t work. An extra dollar in the pocket of a millionaire matters less to them than it does to a working-class person. So why should we tax those dollars the same?
Rich people can and should pay higher tax rates, because we know it’s not wealthy savings accounts but working consumers that drive the economy. Although Initiative 271, which would have scrapped our flat tax and instituted a progressive taxation system, failed to qualify for the ballot, at the very least we should refrain from giving millionaires even more tax cuts.
Wealthy people do not need another tax cut — trust us, we’re doing fine. Sure, we may have lost some money in the market over the past couple months and maybe we’ve had to curtail our spending slightly, but at the end of the day we have a roof over our heads and food on the table.
In fact, throughout this pandemic, many wealthy folks have become significantly wealthier, while so many struggle with the basic necessities. Colorado may not be home to household-name wealthy folks like Jeff Bezos or Warren Buffett, but we are home to plenty of billionaires who can and should contribute more to give back to the system that has helped them earn their fortune.
We urge all other like-minded wealthy individuals in the state to speak up against tax breaks for the rich. It’s time we use our power and privilege to advocate for legislation that strikes back at economic inequality.
After all, during a time when so many are struggling, why would we stay silent and continue to give breaks to the wealthiest while increasing financial burdens on the majority of our citizens?
With all the fortune we’ve been granted, the least we can do is pay our fair share. Wealthy folks like us don’t need another handout, but working Coloradans do need a fully-funded, fully functioning government as this pandemic stretches on for the foreseeable future.
Ron Guillot of Denver is a member of the Patriotic Millionaires, a coalition of high net worth Americans concerned about the destabilizing concentration of wealth and power. James Iacino is the executive chairman of Seattle Fish Co., a Colorado-based company for 102 years, and is a former candidate for Congress and a member of the Patriotic Millionaires.
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