Many Colorado families and businesses are struggling from the effects of the pandemic and related shutdowns. With thousands out of work and many living paycheck to paycheck, the last thing any Colorado resident needs is higher taxes. But that’s exactly what some groups in the state want to impose on millions of hard-working residents. In March, progressives started gathering signatures for Initiative 271, a proposal that would replace Colorado’s flat tax with a graduated income tax. As the campaign gained steam, the Independence Institute stepped in and provided voters with an alternative.
First, a little background. Colorado is one of nine states that have a flat income tax. That means all Colorado residents’ income is taxed at the same rate, regardless of their income level. Thirty-two states have a graduated income tax (also called a progressive tax), where residents are taxed more as their income increases. Seven states have no income tax at all.
A unique feature of Colorado’s tax system is its Taxpayer Bill of Rights (TABOR), an amendment to the state constitution that requires policymakers to get voter approval before raising taxes. TABOR also requires districts (city, county, state, etc.) to keep revenue below the previous year’s revenue plus inflation and population growth. If it exceeds that amount, the excess revenue must be returned to taxpayers.
Back to Initiative 271. The Independence Institute knew Colorado residents were struggling with the economic challenges of the coronavirus. They needed and deserved tax relief, not the $2 billion tax increase that Initiative 271 would bring. Through their 501(c4) arm, Independence offered Colorado residents Proposition 116—a ballot measure to reduce the state income tax rate from 4.63 percent to 4.55 percent. It may seem like a small amount, but this would give each family a little more to spend—helping them get by in this challenging year.
In July, the graduated income tax initiative failed to earn enough signatures to make the November ballot. Independence’s Prop 116, however, easily landed on the ballot with almost 200,000 signatures.
With the election just months away, Independence started to educate voters about the benefits and importance of reducing Colorado’s income tax rate. Prop 116 would not only help struggling Colorado families, it would also expand the state’s economy and create new jobs.
To start, the organization called upon its coalition partners. For several years, Independence has hosted coalition meetings in their downtown office, creating opportunities to build relationships and foster conversations around policy issues affecting Colorado’s residents. With the opportunity of Prop 116 at hand, Independence met with these coalition partners to develop educational talking points that would help Colorado taxpayers understand why they should support the measure.
To raise awareness of Prop 116, Independence used a combination of their own channels and community platforms to raise awareness among affected and concerned taxpayers. They spread the word through their Freedom on Tap series—a platform where Colorado citizens gather to discuss timely topics and hear form experts. The event featuring Prop 116 drew over 150 people who attended via Zoom and Facebook Live. To get information to citizens who care about local government, Independence spoke about the proposition in meetings for their Local Government Project, a program that teaches citizens how to get involved with local processes and leadership. Independence also branched out into the community by attending several townhalls across the state where they spoke directly with voters about the merits of the measure.
Independence also educated voters through several op-ed placements and appearances on state and local media. Independence President and CEO Jon Caldara made the case for the tax cut in his column in the Colorado Springs Gazette. Caldara also appeared on several local radio and TV programs, including a debate on PBS’ Colorado Decides. Ben Murrey, Independence’s director of fiscal policy, appeared on several local radio and TV shows, including The Aaron Harber Show, Ross Kaminsky Show, and Colorado Public Radio.
Opponents asserted Prop 116 was merely a tax cut for the wealthy. At a time when the state was already dealing with budget shortfalls, the state could not afford to lose even more tax revenue with this income tax cut. It would force policymakers to make cuts to education, healthcare, and other essential programs.
Independence responded with a short, simple message: Prop 116 is a flat tax cut for all taxpayers. It would help working families who were struggling financially because of the coronavirus. It would also attract businesses, entrepreneurs, and job creators to Colorado.
Furthermore, Independence pointed out the tax cut is already paid for. When the federal government passed the Tax Cuts and Jobs Act of 2017, it actually increased Colorado’s tax revenues by more than $5 billion. The federal tax cut broadened the tax base while reducing the tax rate. But in Colorado, which bases its income tax on what federal government does, the Legislature broadened the base without lowering the tax rate. As a result, the state government gained $5 billion in additional revenue. Independence noted Prop 116 returns $154 million of that money to hard-working Coloradao citizens.
The Colorado Governor announced his support for Prop 116 on September 24, 2020. He noted: “We’ve long sought an income tax decrease [and] particularly in this challenging time, I think Coloradans certainly need tax relief.” On November 3, voters agreed. The measure passed with 57 percent support. The average Coloradan will now have around $40 more to spend on their child’s education, groceries, rent, or anything else that will help them get by in this difficult year.
Independence is not alone in their quest to help struggling Americans in this tumultuous time. In fact, there are organizations like Independence in all 50 states—each working to give families access to a quality education, affordable healthcare, and job opportunities.
Independence’s director of fiscal policy, Ben Murrey, encouraged these other organizations to focus their time on campaigns and issues that don’t require detailed messaging: “If you are going to win on these issues, in a blue state especially, it helps to find issues where you naturally have the better position. We chose our place of battle and we made it a hill. If the issue requires longer conversations or nuanced arguments, you’re probably not going to win. It’s unfortunate but that’s the political reality.”
As 2020 draws to a close, Independence and other state think tanks are looking ahead to 2021, ready to launch campaigns and advance state solutions that improve the lives of American families.
