The white whale of Colorado Democratic politics for the past 3 decades has been the Taxpayer Bill of Rights (“TABOR”) with many campaigns throughout the years promising a full repeal of TABOR, but either falling short or backing out entirely. Nearly 30 years after it’s passing, TABOR stands mostly intact with only a few minor amendments made. Democrats in Colorado are supporting Proposition CC, which would allow the state to keep excess revenue it taxed. Currently those funds are returned to the public, which typically results in an average of $13 per taxpayer paid back, but hundreds of millions of desperately-needed dollars are cut from education and infrastructure.
Our campaign is supporting a ballot proposition to repeal TABOR, and will promote this proposition alongside our other efforts. This repeal is absolutely necessary in order for our state to move forward. Where other campaigns have failed, we will succeed.
Instead of supporting previous failed ideas that claimed TABOR is too complicated, or that Douglas Bruce is an idiot, our campaign is running to repeal TABOR in order to substantially increase taxes on the 1%.
Currently in Colorado, we have a flat-income tax rate of 4.6%. As a result, a Colorado billionaire like Philip Anschutz, whose investments in oil, railroads, telecom, real-estate, and entertainment have allowed him to earn 50,000 times that of an average Coloradoan’s salary. However, Mr. Anschutz is paying the same exact tax rate as a custodian making minimum wage.
The ironic part of this tax structure? This unprecedented level of income inequality is self-defeating and negatively impacts not only the poor, but also the rich. This is because it has never been the CEOs who drive the economy; it has always been middle class consumers. If a worker in the state of Colorado makes minimum wage, what proportion of that person’s income do you think ends up in the cash registers of local small businesses? Hardly any.
The same can be true of a Colorado billionaire like Philip Anschutz, whose wealth has given him virtually unlimited purchasing power. Despite this, Mr. Anschutz doesn’t buy 50,000 times the amount of consumable goods such as shirts or cars or houses or groceries. He simply cannot consume on the level 50,000 Coloradoans can. His massive $13 billion fortune sits in an excel spreadsheet being under-utilized while Colorado residents are regularly forced to spend more than 100% of their annual yearly income in order to survive and forced further into debt.
Taxes on the rich are not a new idea, but they have been gaining significant political ground. Congresswoman Alexandria Ocasio Cortez recently came out with a 70% marginal income tax rate proposal for those making $10 million a year and the idea even received bipartisan support: 71% of Democrats, 60% of independents and 45% of Republicans said they were in favor a revised marginal income tax rate .
By tying the Repeal of TABOR to a tax on the 1% our campaign can finally move our state in a right direction with a more promising future and an economy that works for all of us; not just the one percent.
The Details – Who Pays & Who Benefits & How
Taxing wealth and ensuring a fair tax system does not come with a simple solution due to the fact that wealth comes in many forms and not just in yearly salaries, but investments, stock options, dividends, inheritance, hedge funds, and markets outside traditional economies.
There are two models that have shaped our thinking on how to create an optimal tax structure for the state of Colorado to capture wealth in a meaningful way. The first is a proposal by Emmanuel Saez and Peter Diamond, an MIT professor who had recently won the Nobel in economics, and released a proposal titled “The Case for a Progressive Tax”. In this paper, the authors identified the many ways the wealthiest among us avoid paying taxes by reclassifying labor income as capital since we do not tax capital gains in the same way we do labor in this country. The authors suggested dramatically changing that system in favor of implementing a combination of a progressive marginal income tax where those at the top pay close to 73%, and an estate tax with the ultra-wealthy paying above 60%, and a tax on capital gains, corporate profit, and dividends.
The second proposal is from another influential thought-leader, Thomas Piketty, who has influenced progressive reforms with his wealth tax that Elizabeth Warren also adopted in her national platform. The purpose of this tax is to prevent the permanent intergenerational accumulation of wealth, which Piketty argues will be inevitable due to the rate of interest on capital exceeding the rate of economic growth.
In plain English, wealth grows faster than labor and those at the bottom will continue to lose ground while the rich gain wealth through no virtue of their own and without their participation in the economy besides obtaining interest and accumulating more wealth for themselves.
In our proposal, titled The Robin Hood Taxes, we call for a full repeal of TABOR and the implementation of a new tax structure that draws from both of these schools of thought to meaningfully and responsibly raise taxes on those who have often skipped out on the bill while their net worth expands at an unprecedented rate.
The Colorado Green New Deal, the Rent Relief & Not for Profit Mortgage, and other proposals on our platform, are just a few of the ways we discuss how best to use this increase in tax revenue to ensure fairness for all. When we begin to repair our broken systems, we are putting in place unprecedented investments back into the programs that will meaningfully reshape what our economy looks like, and more importantly, we move away from band-aid solutions that only provide temporary relief.
How Would This Work?
A completely fair question that I receive often on the campaign trail is how all this change will happen. It is absolutely true that when those at-the-top hear this proposal, and as this campaign gains momentum leading up to the 2020 primary & general election, the 1% will spend millions of dollars convincing Coloradans who would benefit from this tax that this will cost them their job and that the rich are already at their financial limit and do not have a penny to spare. However, nothing about these claims are based in reality. In reality, up until the 1980s, the 1% used to pay much more in taxes which coincidentally was about the same time we saw pay and wealth for CEOs and Corporate Executives begin to skyrocket. Not only did their pay increase at a rate 127 times that of the average worker pay, they are contributing less tax revenue than ever with most of their income being unused and kept out of our local and state economy.
We understand that facts have a difficult time being heard in this political discourse, but our campaign is driven by people with the courage to have these conversations in communities that may disagree about anything and everything, to show that we all stand to benefit, and we the people have the power to tax in this state.
By taxing the 1% and putting that tax revenue into community investments, we will excite an unprecedented wave of voter turnout and build a political revolution to take back our right to tax. Repealing TABOR for the purpose of creating a tax structure that allows everyone to benefit from one of the fastest growing economies in the wealthiest nation on the face of this earth is not only good economic policy steeped in theories from noble prize winning experts, but it’s good politics too. There have been a lot of revolutions about taxes and power, and this one is no different. From the American Revolution to the French Revolution, those who had the courage to stand-up for their rights knew what that it was workers that created wealth and those at the top were unfairly taking a massive cut. We’ve reached a point where inequality is higher than either of those two examples, and it is long past due for us to end TABOR and take back our state.