DENVER — After years of voter-approved measures scaling back Colorado’s income tax rate, proponents of significantly higher government spending have cleared a major hurdle at the state Title Board towards raising taxes by $4.1 billion annually.
Proposed Initiative 181 would replace Colorado’s flat income tax with a so-called “progressive” tax where taxpayers are charged higher rates based on their income.
The initiative is being put forth by the Bell Policy Center, a progressive nonprofit led by former Colorado state rep. Chris deGruy Kennedy, who while in office advocated multiple times for such things as reducing refunds under the Taxpayer’s Bill of Rights (TABOR) and universal healthcare. The Title Board gave the green light to move forward on Dec. 3 after a battle over whether or not the proposal fit under Colorado’s single-subject law.
The original draft of the measure not only replaced the current 4.4 percent flat tax rate with a progressive rate, but it also allowed Colorado to permanently keep all money raised over the revenue cap in place under TABOR, and it would have ended TABOR’s prohibition on surcharges.
TABOR is a state constitutional amendment that, among other things, modestly limits growth of a portion of the state budget to a formula of population growth plus inflation.
However, the Title Board said no to the initial measure, so deGruy Kennedy and a coalition of other progressives and left-leaning organizations across the state countered with a version that no longer includes the elimination of surcharges but still allows the state to keep and spend excess revenues gained by the tax hike, essentially nullifying the TABOR limit.
Policy analyst Nash Herman of the free-market Independence Institute* says the proposal is still a disaster for Colorado.
“It is difficult for me to even describe 181 as just a progressive tax measure because, as it is currently written, it does far more than create a graduated income tax,” Herman told Complete Colorado. “In its current form, the measure would replace the flat tax system with a progressive one, allow the state to retain the additional revenue that would otherwise be refunded to taxpayers, and most importantly, erode Coloradans’ foundational principle of taxation with representation.”
In a recent opinion piece, Herman writes: “States with graduated tax systems, such as California, have often experienced periods of extreme budget volatility due to an overdependence on the uber-wealthy to foot the lion’s share of the income tax bill. When unpredictable economic conditions shift or when wealthy people simply relocate, California’s vulnerability becomes apparent.”
Herman accuses progressives of exploiting ongoing budget shortfalls and class envy to justify the progressive tax, but notes that Coloradans have a long history of supporting the taxpayer protections in TABOR.
“The Taxpayer’s Bill of Rights remains popular in Colorado because it constitutionally protects the consent of the governed,” he said. “Initiative 181 would likely shift Colorado’s constitutional tax structure into statute, meaning that future tax changes could be made without voter approval. That should be deeply concerning to Coloradans who value having a direct say in decisions about taxation.”
Proponents now await petition format approval from the Secretary of State to begin circulating the initiative for signatures, aiming for the 2026 ballot.
*Independence Institute is publisher of Complete Colorado.
