Route 66 leads to damaging tax hike
There are any number of good reasons to vote against Amendment 66, the ballot initiative that would increase Colorado income taxes to generate additional revenue for public education.
The fact the ballot measure would amend the Colorado Constitution rather than state statutes and therefore make it difficult to address unintended consequences constitutes by itself a strong argument in opposition. There are concerns, too, increased tax revenues could be used to support the Colorado Public Retirement Association fund rather than go exclusively to classrooms as billed. That’s not to mention the questionable assertion increased spending on public education actually correlates with improved outcomes.
Perhaps the best reason of all to vote against Amendment 66, though, involves the potential damage an estimated $950 million annual increase in income taxes could inflict on small business operations in Colorado and, in turn, the economy.
But don’t just take our word for it. The Tax Foundation — a nonprofit, nonpartisan, tax research organization based in Washington, D.C. — has analyzed the issue and concluded the tax increases proposed under Amendment 66 would have negative effects on the state economy.
The measure would impose for the first time in Colorado a two-bracket system. The rate on taxable income under $75,000 would rise from 4.63 percent to 5 percent. Individuals with taxable income of more than $75,000 per year would pay a rate of 5 percent on the first $75,000 and a rate of 5.9 percent on any taxable income above that amount.
Those increases would affect not only individual taxpayers, but also by extension most businesses in Colorado. That’s because the majority of businesses are what called “pass through” or “flow through” entities. Business income passes though to the owners, who pay taxes on that income on an individual basis.
By one estimate, 95 percent of all Colorado businesses are pass-through entities.
In paying more dollars in taxes, business owners have fewer dollars to buy new equipment and expand their operations — or hire additional staff. And make no mistake: small businesses play a collectively big role in hiring. According to the U.S. Small Business Administration, small firms accounted for 64 percent of the new job created between 1993 and 2011.
Still don’t think taxes affect economies on a statewide scale? Think again. The Tax Foundation reviewed 26 academic studies related to economic growth and taxation and found that 23 of the studies associated higher taxes with lower growth.
The board of directors of the Club 20 coalition in Western Colorado has come out against Amendment 66, as has the board of the Grand Junction Area Chamber of Commerce. And when the National Federation of Independent Business polled its members in Colorado about Amendment 66, no less than 96 percent of those who responded said the group should oppose the measure.
Education plays a crucial role in the economy, too, in preparing students for the workplace. That’s not to mention the importance of good schools in attracting businesses to a state or locality. Businesses should be involved in the process in supporting education — in making clear the skills businesses require in new hires and helping schools teach students those skills.
Unfortunately, 66 isn’t the route to get there. For that reason, vote no.