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 despite his massive fortune, Mr. Anschutz is paying the same exact tax rate as a custodian making minimum wage. That’s a radical system that benefits only billionaires and it needs to end.
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 bottomless wallet, 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 are often 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 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 .
Although we implement a similar model in our plan, it does not solve the problem. 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.
In order to tax wealth meaningfully, we leaned heavily on two economic theories, one by the world renown economist Thomas Piketty and the other by Emmanuel Saez a professor economics at UC Berkeley and Peter Diamond, an MIT professor who had recently won the Nobel in economics both of which aim to reduce income inequality while boosting the health of the overall economy. Below are a combination of those proposals to tax those who have historically avoided paying their fair share while enriching only themselves.
One of the biggest tax injustices that occurs regularly in our state is how little we allow our oil and natural gas companies to pay in taxes. After raking in a record-breaking $9 billion in profit in 2018, they effectively paid 0.6% in taxes with some years paying as low as 0.2%, which did not come even close to covering the cost of the damage that they caused to the local and global environment.
The severance tax rate (or the tax on oil and gas) is 5% currently in Colorado. However, oil and gas companies have exploited loopholes and have been able to get away with keeping nearly all of their profits and paying a much lower rate.
We want to close every single loop hole they took advantage in years past, and raise the severance tax (which is one of the lowest in the Western U.S.) to 10%.
This is a proposal that Elizabeth Warren has 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.
We institute a 3% annual tax on any wealth valued over $25 million dollars and a 5% tax on any wealth valued over $50 million
This does not criminalize being wealthy, but collects a small part of the interest on these fortunes that typically grow at much faster rate than inflation and certainly more than our single digit tax.
Marginal Income Tax Rate
A flat income tax rate, such as the one we have in Colorado is system that disproportionately negatively impacts the poorest among us while allowing those with massive salaries to keep a vast majority of their wealth for only themselves.
Before TABOR instituted a flat tax rate, those at the top were paying as much as 10% on their state taxes while those in the lower brackets were paying as little as 1%. This system brought in significantly more revenue per person in Colorado before TABOR , and our plan is to return to a similar system. Below is our easy to understand marginal income tax plan with 8 different categories, including for first-time ever in Colorado state history, a category for millionaires.
Any individual making less than $100,000 a year and any household making less than $200,000 annually will see a reduction in their state taxes with those at the bottom paying 0%
This tax is essential to ensuring that wealth and money flows in our economy instead of being kept out of the market and in the hands of only a handful of families.
A 2013 paper by Piketty and Saez made this argument explicitly, stating that the ideal estate tax rate should be close 50 to 60 percent, and possibly even higher for the very rich.
We will follow these proposals to a T and work with our legislators nationally to ensure that with a combination of federal and state taxes, we optimally tax estates valued over $10 million and tax estates like Philip Anschutz’s at a rate closer to 90%
Corporate Income Marginal Tax Rate
Currently in Colorado, Corporations pay the same exact tax rate as a custodian, 4.63% which represents one of the lowest corporate tax rates in the country. Our plan is to stop treating corporations like those in poverty, and institute a marginal income tax rate with corporations making hundreds of millions of dollars in profit a year, getting taxed at a higher rate once they hit that threshold.