DENVER – Colorado voted to pass Proposition 116, which cuts the state income tax rate from 4.63% to 4.55% and will reduce the state’s revenue by millions in the midst of a recession.
The Associated Press called the race close to 11 p.m. Tuesday night, with 57% of Coloradans voting in favor of Proposition 116’s passage, compared to 43% who voted against the measure.
The cut on the individual and corporate income tax rate by 0.08% for 2020 and future years will reduce revenue for the current budget year by an estimated $154 million for the 2021-22 budget year – about 1.2%, according to Legislative Council Staff.
The tax cut will save Coloradans money, though the savings will be moderate for many. Colorado’s median household income is around $70,000, according to the U.S. Census Bureau.
Because of the tax cut, people making $50,000 a year in taxable income would save about $40 a year; people making $25,000 a year would save $20; those making $125,000 a year would save $100 each year and people making $1 million a year would save $800 in taxes.
Proponents of the measure argued that it would provide even moderate savings to Coloradans during the economic downturn and that it would promote business development in the state.
Opponents argued the tax cut would hurt the government’s budget when people are relying on state services more than ever and is facing an estimated $1.6 billion deficit, and that the savings for individuals were menial compared to the savings for higher earners.
Opponents of Proposition 116 said they understood why Coloradans voted in favor of the tax cut but that they felt voters made the wrong choice.
“Proposition 116 puts us even further away from the fairness Coloradans need, ensuring our schools, roads, health care, housing, and so many other important programs and services see even deeper cuts while the rich get richer,” opponent group Fair Tax Clorado said in a statement. “The economic fear created by the COVID-caused recession contributed to Colorado’s unfortunate outcome for state investments, but the facts don't change: This tax cut increases the unfairness in the tax code and will cost Coloradans. How much remains to be seen, but we know our elected leaders will face tough choices deciding how the state pays for Prop 116’s giveaway to the wealthy.”
The Denver Metro Chamber of Commerce was among the opposition to the measure, arguing Colorado already has one of the lowest income tax rates in the country and that the current rate doesn’t prevent companies from coming to the state or from expanding their current practices here.
This is a developing news story that will be updated.