Any good business person knows that having a quality education system is key to growing a healthy state economy. We need good schools to produce a competent workforce and attract workers and their families as well as new businesses.
Unfortunately, the latest effort to improve our schools through a $1.6 billion tax hike — the largest in state history — does absolutely nothing to guarantee our schools will get any better while imposing an unsavory combination of new taxes and potential service cuts that promise to send businesses and jobs scurrying.
The intentions of those who drafted Amendment 73, I’m sure, were honorable. But as they say, the devil is always in the details. And while this is being sold as a tax increase on wealthy CEOs and big corporations, that’s simply not true.
In-depth analysis of the sometimes tricky wording of Initiative 73 shows that what it would do is trigger a massive tax increase on tens of thousands of small businesses, farms, middle-income married couples and each and every homeowner in Colorado according to a new study released by Common Sense Policy Roundtable.
It could also siphon money away from the budgets for firefighters, sheriff’s departments, public health agencies, emergency medical services, libraries, parks, recreation facilities, water districts and more.
In other words, Amendment 73 is a job killer that would eliminate Colorado’s competitive advantage in attracting new business and place significant tax burdens on Coloradans while reducing budgets for crucial public services.
If this unprecedented tax hike is approved, Colorado would go from having one of the lower income tax rates in the nation, to having the eighth highest, which would put us on par with New York and Vermont. Colorado also would have the highest income tax rate in the Rocky Mountain West, higher even than New Mexico, which is notorious for its unfriendly business environment and lagging economy.
Amendment 73 would also increase corporate income tax rates to 6 percent, higher than most neighboring states, including Arizona, Utah and New Mexico
For small businesses (e.g., many LLCs and S Corps), Amendment 73 would deliver a double-whammy, forcing many to pay an income tax rate as much as 37 percent higher than that applied to multi-billion-dollar corporations.
For instance, a small business earning $2 million a year and filing under the individual income tax code would pay an additional $60,595 in just the first year. A corporation making the same amount and filing under the corporate income tax code would pay $27,400 more in year one.
At the same time, Initiative 73 would give lawmakers a blank check to spend on education. While on its face that sounds good, what our schools need is not necessarily more money, but in-depth reform to ensure the dollars schools get are being spent wisely – in other words, to the classroom, particularly to the benefit of teachers and kids.
Yes, we all want to give our teachers a raise. But this proposal offers absolutely no accountability or any guarantee that teachers would get all or even most of this enormous tax hike. Backers of the measure have openly bragged that school districts can spend the money however they want. That’s why there is little doubt that a significant portion of the money will go toward administrators, overhead and the education bureaucracy. Currently, only 55 cents on every education dollar goes to pay teachers.
Nothing in Amendment 73 ensures better outcomes. It only guarantees more inputs (money). More money may or may not yield higher test scores, college readiness, or job preparedness. In the past, there is little correlation between funding increases and outputs. Amendment 73 guarantees nothing.
In other words, this proposal is bad for everyone, including the very education system it is intended to support.
If we want to keep Colorado business-friendly and growing, we need to reject this poorly crafted, potentially disastrous initiative and get back to work on fiscally responsible solutions for raising teacher salaries and improving student performance, so we can get on with the business of building a world-class workforce for the future.