Colorado voters defeat a progressive income tax hike

On Nov. 5, Colorado voters defeated a progressive income tax increase by a two-to-one margin — more than 66 percent of the voters said no to higher taxes. Colorado’s Amendment 66 was a ballot initiative to swap out the state’s competitive flat rate income tax for a progressive income tax increase. Specifically, lawmakers wanted to...

On Nov. 5, Colorado voters defeated a progressive income tax increase by a two-to-one margin — more than 66 percent of the voters said no to higher taxes.

Colorado’s Amendment 66 was a ballot initiative to swap out the state’s competitive flat rate income tax for a progressive income tax increase. Specifically, lawmakers wanted to replace Colorado’s 4.63 percent flat rate tax on personal income with a progressive income tax that would have increased personal income taxes for all Colorado taxpayers.

Advocates for the progressive tax increase tried to disguise the tax hike as education reform. But the Tax Foundation uncovered the truth about what the tax hike proposal really was – a tax increase on Colorado’s low- and middle-income residents. Here are some of the facts the Tax Foundation uncovered:

• Proponents of Amendment 66 argue that a person making $30,000 per year will pay “about $4 per month” more in taxes, or the cost of “an ice cream cone.” At this income level, the additional $4 a month in taxes from Amendment 66 is better characterized as one less meal, not one less leisure good (such as an ice cream cone).

• Similarly, a taxpayer earning $50,000 annually will pay an additional $9 per month, which supporters equate to “a burrito with extra guac [sic].” In truth, this amounts to an additional $108 per year, on average, or roughly the cost of heating a typical Colorado home for one month during the winter.

• According to the Internal Revenue Service, more than 37 percent of Coloradans have an adjusted gross income of less than $25,000. A family earning this amount would pay an estimated $31.08 in additional taxes, which is equivalent to the average cost of feeding a 1-year-old child a healthy diet for one week.

• Finally, a two-earner, two-child household, with each parent earning $57,000, would see an estimated annual tax increase of $393, or roughly the cost of the employee portion of one month of family health insurance coverage. Similarly, a person earning $40,000 would see an approximate tax increase of $82 per year, or roughly the cost of a worker’s portion for one month of employer-provided health insurance.

While Coloradoans celebrate their progressive tax hike defeat, lawmakers in Illinois continue to push for a multibillion-dollar progressive income tax increase.

Under current Illinois law, the income tax rate for individuals will be 3.75 percent in 2015. But there are a few plans on the table in Illinois that wouldn’t allow the 2011 income tax hike to decrease and instead would raise tax rates even higher with a progressive income tax hike.

One tax hike plan was introduced by state Rep. Naomi Jakobsson, D-Urbana. Under her plan a higher marginal rate of 4 percent kicks in for people earning just $18,000. That income tax rate targets Illinois’ working class.

Jakobsson’s progressive tax rates attack the middle class as well. Her 5 percent marginal tax rate applies to people earning just $36,000. When an Illinoisan earns more than $58,000, Jakobsson’s marginal tax rate jumps to 6 percent, and again to 7 percent on income earned after $95,000 – nearly double the rate Illinoisans will pay in 2015.

Illinoisans should follow the lead of Colorado taxpayers and begin calling out a progressive income tax for what it really is – a tax hike in the state’s working- and middle-class residents.