By Dustin Hurst | Watchdog.org
A massive tax increase on Colorado’s November ballot could make the state less attractive to businesses and wealthy people looking for a refuge from high-tax states like California and Illinois.
Travis Brown, author of the book How Money Walks, told Colorado Watchdog that Initiative 22, a ballot measure that, if approved, would hike state taxes by $950 million each year, would repel those looking to live in a low-tax atmosphere.
“When you look at it, you’re really raising the price of work,” Brown said, noting that progressives often use taxes to discourage some behavior, like smoking. “Why wouldn’t you expect to get less of it?”
Brown’s book and website reveal that Colorado’s low taxes have made it a haven for those seeking relief from high tax states like California, Illinois, New York and New Jersey.
According to Brown’s research, Colorado gained more than $13 billion in adjusted growth income since 1995, including $4.15 billion from California, $1.49 billion from Illinois, $760 million from New York and $610 million from New Jersey.
Here’s a look at Brown’s map:
The only anomaly among Colorado’s number was wealth that came from Texas, a state with an even lower tax burden than the Centennial State. Brown’s research, which consisted of examining IRS documents dating back to 1995, found that Colorado got $1.08 billion from Texas.
Brown has an explanation for that, though. “There’s something there that you can’t do anywhere else,” he explained, noting that Denver is an urban area with myriad recreational opportunities available in the nearby Rocky Mountains.
“We don’t say that tax rates are the only factor,” Brown said. “But, it’s a top factor.”
Initiative 22, which has major backing from the state teachers union, would raise Colorado’s income tax substantially — even more for wealthy resident. For those making less than $75,000 annually, the new tax rate would be 5 percent, up from 4.63 percent. For those earning more than $75,000, the rate jumps to 5.9 percent.
Colorado’s income tax ranks as the 13th-lowest among state that levy the charge. Seven states do not burden residents with an income tax.
If voters approve the package, Colorado would move to 15th-highest in the nation for those earning more than $75,000 annually.
Jon Caldera, an economic analyst with the Independence Institute, a Denver-based conservative think tank, told Colorado Watchdog the tax hike would be a “job killer.”
“The biggest driver of jobs is small business,” Caldera said, noting that many small business operators file company income under individual income taxes. “It’s going to scare businesses away.”
Backers of the tax hike a busily preparing for an all-out blitz to persuade residents to accept the higher rates. According to Ed News Colorado, the Colorado Education Association, the state teachers union, contributed $250,000 to Colorado Commits to Kids, the group serving as the main proponent of the measure.
The report also notes that CEA workers also helped gather some of the signatures required to put the initiative on the November ballot.
Gov. John Hickenlooper, a Democrat, quietly announced his support for the tax hike earlier this month.
Caldera isn’t impressed.
“They call it reform, but it’s the same old thing,” Caldera criticized, adding that tax-hikers only want to throw more money at schools without providing true reform or accountability.
“I think they’re going to have a hard time selling this tax hike,” he said.
Contact Dustin Hurst at [email protected]