No less than Gov. Jared Polis has called publicly for eliminating Colorado’s income tax. He is, of course, no anti-government rebel from the radical right. He is a liberal Democrat from Boulder — and a highly successful internet entrepreneur who gets how to create prosperity.
His challenger for re-election on this November’s ballot, Republican gubernatorial contender and CU Regent Heidi Ganahl, is also a successful entrepreneur who understands wealth creation and economic opportunity.
And both of them know that the income tax hinders wage growth and job creation and stymies prosperity overall. Which is why each wants to eliminate Colorado’s income tax and put our state in the company of Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
That’s also why each supports Proposition 121 on this fall’s mail ballot. It will reduce the state income tax rate for individuals and corporations from 4.55% to 4.40%. An analysis by Colorado’s Common Sense Institute found it will save taxpayers $767 million the first year after implementation.
If political polar opposites like Polis and Ganahl can see eye to eye on this one, it makes all the more compelling a case for it and helps explain why the proposal is likely to pass Nov. 8.
It has our vote, as well. Vote YES on Prop. 121.
Prop. 121 is about more than near-term tax relief — much as that’s warranted in its own right amid the twin torments of inflation and looming recession. The measure is a chance to follow up on Colorado voters’ overwhelming embrace of a similar statewide ballot proposal in 2020 that lowered the income tax from 4.63% to its current 4.55%.
In that light, Prop. 121 could be viewed as another step toward eliminating the income tax altogether.
Proposed and petitioned onto the ballot by a host of grass-roots volunteers and led by the Independence Institute’s Jon Caldara and veteran Republican state Sen. Jerry Sonnenberg of Sterling, Prop. 121 hails from the political center-right. But it connects with politicians as well as rank-and-file voters across the spectrum because they see its wisdom and fairness.
Taxing income is fundamentally counterproductive. Lower-wage earners striving to make it from one paycheck to the next need every penny they earn. Job-creating corporations, meanwhile, want to operate in no-income-tax states in part because their employees take home more of what they earn. That eases recruitment, retention and corporate overhead. No income tax on corporations also encourages more re-investment in their own operations.
As Polis said, when you tax something you penalize it — and get less of it. The income tax leaves us with fewer jobs, less take-home pay, less capital.
Lowering the income tax in this election and eventually eliminating it even will be a boon to the state’s tax coffers. By making the state more attractive to new employers, the added people will mean more sales and property tax revenue, offsetting previous income-tax revenue.
There are plenty of other ways to replace lost income-tax revenue, as well. Income-tax-free South Dakota and Tennessee did it largely by increasing taxes on cigarettes and liquor. So long as steps are taken to exempt essentials like groceries, sales and excise taxes are a fairer way to tax because they give taxpayers more discretion over their own income.
Prop. 121 is one of those rare opportunities to get both short-term gain — and an even bigger windfall over the long haul. Vote YES.
Denver Gazette Editorial Board