![]() ![]() ![]() Colorado is one of only nine states with a flat tax, with another seven states imposing no taxes on earned income.They rest of the states saw significant growth that equaled or far outpaced their neighbors, according to Center on Budget and Policy Priorities. Only Connecticut and New Jersey saw lower economic growth - measured by change in private sector GDP - than their neighbors.Of these, Connecticut was the only state that didn’t see annual per capita growth that outpaced neighboring states. have raised their top marginal tax rate since 2000: California, Washington D.C., Maryland, Minnesota, New York, Oregon, New Jersey, and Connecticut. When looking at Colorado taxes compared to other states, seven states and Washington D.C.A flat income tax was enshrined in the Colorado Constitution in 1992. Colorado had a graduated income tax until 1987.Colorado has a significantly regressive tax structure, where the wealthy pay much less in taxes (by percentage) than Coloradans with lower incomes. ![]() Under the proposed measure, Colorado would move to 27th, still below the national average. Colorado currently ranks 33rd in the country in state and local taxes per $1,000 of personal income.This is below states like Arkansas (7th), New Mexico (9th), Idaho (18th), Kansas (28th), and Utah (29th). Under the proposed fair tax measure, Colorado would move to 39th, still well below the national average. Colorado currently ranks 45th in the country in state taxes per $1,000 of personal income.It would rank Colorado higher for incomes at $500,000 and above.Ĭolorado’s Tax Rankings & Current Inequities The proposed fair income tax for the 2020 ballot would decrease the effective tax rate for incomes below $250,000, placing Colorado as one of the lowest effective tax states for incomes at and below that amount.The effective tax rate is the best comparison measure between state income taxes because it measures the true tax rate individuals pay at certain income levels.The effective tax rate for the above example is 6.5 percent, or $6,500 of $100,000. The “effective tax rate” is the percentage of an individual’s income paid in taxes overall.For example, if a person makes $100,000 annually, the first $50,000 might be taxed at 5 percent, while the remaining $50,000 might be taxed at 8 percent. Under a fair income tax system, portions of a person’s income are taxed at different rates.For example, while a millionaire would see a tax cut on their first $250,000, they would see a tax increase on income above $250,000. The measure would create three new tax brackets that increase tax rates on marginal income above $250,000.More than 95 percent of Coloradans would see an overall tax reduction and Colorado would be able to generate significant revenue to invest back into our communities.The measure would reduce the tax rate for income below $250,000 for all Coloradans.To better understand the proposal, we’ve compiled some quick facts below. To change this, a proposal for a fair tax system is making its way through the titling process and, if it gathers enough signatures, will be on Colorado’s 2020 ballot. Colorado’s middle class pays more in taxes than the wealthiest 5 percent of Coloradans. ![]()
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