Nassim Nicholas Taleb, author of the books Antifragile and The Black Swan, defines fragility as: “what does not like volatility, and that what does not like volatility does not like randomness, uncertainty, disorder, errors, stressors, etc.”
The Democrat plan to replace Colorado’s flat income tax with a progressive tax is a pitch-perfect example of this. Aside from being a solution in search of a problem, the scheme would further fragilize Colorado’s already delicate budget and economy.
Exacerbating budget fragility
Progressives are exploiting budget shortfalls and class envy to justify the progressive tax.
From their perspective, having more money in the hands of a progressive-controlled legislature would shield Colorado from the volatility caused by budgetary shocks, such as the Trump administration’s recently passed spending bill.
However, as explained by Independence Institute’s Jake Fogleman, states with graduated tax systems, such as California, have often experienced periods of extreme budget volatility due to an overdependence on the uber-wealthy to foot the lion’s share of the income tax bill.
When unpredictable economic conditions shift or when wealthy people simply relocate, California’s vulnerability becomes apparent.
Meanwhile, Colorado’s state government tends to rely on broader-based taxation, meaning more people share the cost at a lower rate per person, thereby promoting greater budget stability.
Despite this, Colorado’s budget situation remains volatile (primarily due to an ongoing addiction to overspending) as evidenced by recent budget shortfalls the legislature has reluctantly addressed.
Biting the hand that feeds
If Colorado proceeds with a progressive tax, thus increasing its reliance on a minority of wealthy taxpayers for revenue, the state’s budget will become even more fragile and prone to “black swan” events.
As Christopher Song explained, Colorado’s highest earners—those making $200,000 or more annually—comprise only 8 percent of Colorado households, yet they already account for 48 percent of state income tax revenue.
The push for a progressive tax in Colorado highlights the left’s hubristic assumption that Colorado’s wealthiest will forever tolerate providing for a state whose legislature no longer hides its disdain for business and entrepreneurship.
As of 2023, Colorado was the 12th-most heavily regulated state in the country, with 165,994 regulatory restrictions, according to the Mercatus Center.
Even more recently, the Colorado Chamber of Commerce ranked Colorado as the sixth most regulated state in the nation, with nearly half of its roughly 200,000 regulations being “excessive or duplicative“.
Add to that a legislative desire to end Colorado’s “labor peace” agreement between business and unions, and you have the perfect storm to drive out the state’s highest earners, who are also highly mobile.
And now the left is pushing for this progressive income tax, which will only add fuel to the fire.
The progressives currently running Colorado can only bite the hands that feed them so many times before they go searching for greener pastures.
