Denver - The Board of Directors of the Colorado Chamber of Commerce has voted to oppose Amendment 73, which is the ballot measure that would increase corporate income taxes and progressively increase individual and income taxes through a complicated formula to earmark $1.6 billion to fund P-12 education initiatives and programs
"Amendment 73 would cement an extremely complicated measure into the Colorado Constitution with unforeseen consequences," said Chuck Berry, Colorado Chamber President and former Speaker of the Colorado House of Representatives.
"The issue of school finance is the responsibility of the Legislature, which is best suited to address intricate school funding issues in state statute," Berry said.
"An interim legislative committee has been working on the school finance formula for more than a year," Berry said, "and it should be allowed to complete its work."
"In addition, for the statewide business community that the Colorado Chamber represents, Amendment 73 will make Colorado a markedly less attractive state in which to locate and do business," Berry said, "and that will result in fewer jobs for Coloradans."
The entire tax-increase burden would fall on higher-income individuals and the business community. Questions have been raised about the measure's likely impact on the state's public pre-kindergarten through grade 12 (P-12) system. In addition, Amendment 73 would throw sand into the complex gears of the state's local property tax system and severely hurt local governments and special taxing districts while protecting school districts.
Tax and Economic Impact
The proposed measure would replace the current flat tax system (4.63 percent) with a graduated system for individuals and businesses earning more than $150,000 yearly.
The tax rate for individuals would increase from 5 percent all the way up to 8.25 percent with intermediate steps of 6 percent and 7 percent. Many businesses, such as sole proprietorships and limited liability companies (LLCs), file through individual tax returns. This provision also would apply to trusts and estates. Each tax bracket's step increase applies to the marginal income increase above the prior bracket's ceiling.
The corporate income tax rate would be raised to 6 percent, which is a 29.6 percent hike in the rate. This would provide $229.4 million more revenue in fiscal year 2019-2020.
The REMI Partnership study makes the following points:
First, the proposal would increase taxes by $1.6 billion, which would include a $1.4 billion increase in personal income taxes. This would be a 20 percent increase in tax revenue.
The top marginal rate would leap from 37th to 8th among states with income taxes. This would be an 80 percent increase from the existing tax rate.
The corporate income tax rate would increase by 30 percent, which would raise Colorado from 43rd among states with a corporate income tax to 31st.
The REMI report predicts a major, negative impact on the Colorado economy:
Average annual loss of 11,400 private-sector jobs annually for the next 20 years.
Annual decrease of state gross domestic product (GDP) would be $850 million.
Disposable personal income will drop by $1.8 billion yearly.
Local Property Tax System
The REMI Partnership report also examines the question of what Amendment 73 would do to the state's complicated property tax system by setting new assessment rates for residential property taxes levied by schools.
The legislature will likely reduce the residential property tax assessment rate during its next session, perhaps to 6.1 percent from the current 7.2 percent. Amendment 73 would freeze the rate at 7 percent for schools, however, to prevent a loss of tax revenue.
"This likely means that districts such as water, fire and police will face much lower revenue as the assessment rate falls while the school district rate remains constant," the REMI Partnership report said.
About The Colorado Chamber of Commerce
The Colorado Chamber of Commerce is the registered trade name of the Colorado Association of Commerce and Industry (CACI). CACI was created in 1965 when Colorado's business leaders merged the Manufacturer's Association of Colorado with the Colorado State Chamber of Commerce.
The Colorado Chamber's mission is to champion a healthy business environment. To achieve this mission, the Colorado Chamber pursues four key strategies:
(1) Maintain and improve the cost of doing business;
(2) Advocate a pro-business state government;
(3) Increase the quantity of educated, skilled workers; and
(4) Strengthen Colorado's critical infrastructure (roads, water, telecommunications and energy).
Of the Colorado Chamber's approximately 400 members, there are 40 local chambers of commerce, 40 trade associations and several local economic development organizations. The Colorado Chamber's members employ about 180,000 workers.
Because of its manufacturing legacy, the Colorado Chamber is the official state affiliate of the National Association of Manufacturers (NAM).