Coloradans will have a chance next week to vote for greater investments in their schools through an amendment to the state’s constitution that would improve the state’s income tax structure and dedicate new revenues to education.
Amendment 66 — a ballot measure that businesses, parents, and teachers support — would generate new revenue to shrink class sizes, expand access to pre-kindergarten, and implement new measures for teacher evaluation and accountability. All the new money would go to boost preschool and k-12 investments.
The proposal would transform Colorado’s current income tax from a flat 4.63 percent into a two-rate structure: a 5 percent rate for taxable income below $75,000 and 5.9 percent rate for income above that threshold. The 5 percent rate is equal to what Coloradans paid for most of the 1990s — a period of strong economic growth for the Centennial State.
A recent Wall Street Journaleditorial wildly overstates the amendment’s impacts, stating that, if passed, the result would be a “26.6% tax increase on anyone making more than $75,000 a year.”
This is incorrect. Thanks to Colorado’s personal exemptions and standard deductions, the top rate will kick in at a higher income level than that. And the Journal is confusing an increase in the top tax rate with an increase in the amount of taxes families would actually pay, which would vary from household to household.
In reality, a typical household earning $100,000 annually would pay about $250 more in taxes — or one-quarter of 1 percent of total income. Most Colorado taxpayers would pay less. Well-off families would pay more in income taxes, but nowhere near the drastic increase that the Journal claims.
And while passing Amendment 66 would improve the fairness of Colorado’s income tax, the state’s richest residents would still pay far less in taxes as a share of what they earn relative to lower-income households. Currently, the top 1 percent of income earners in Colorado pay roughly 4.6 percent of their income in state and local taxes. The state’s poorest households pay almost double that as a share of their income, nearly 9 percent. Under the proposal, the richest Coloradans would pay only slightly more, at 5.4 percent.
Colorado made deep and difficult cuts to K-12 funding as a result of the recession; it now spends about $2,000 less per student than the national average and ranks 42nd in the nation in terms of per-student funding. Amendment 66 would provide significant resources toward closing this gap, strengthening Colorado’s education system, and bolstering its economy today and in the future.