Soon after I first explained that Colorado taxpayers keeping more of their own money under the One Big Beautiful Bill Act (OBBBA) is actually a good thing, more false claims about the OBBBA, as well as Colorado’s Taxpayer’s Bill of Rights (TABOR) materialized. As soon as I rectified those misconceptions, a Colorado Sun article presented more misdirected blame for the state’s current budget gap. Now it’s apparently the fault of Colorado voters.
Blaming voters for lowering taxes
The crux of the Sun article is that the two Independence Institute-led ballot measures, Propositions 116 and 121, which twice lowered the state’s flat income tax, and which voters overwhelmingly passed, exacerbated this year’s budget tribulations.
The article highlights how critics of the propositions warned that a couple of high-revenue years were no good reason to trim state income taxes, and that the state would eventually pay the price.
Now, in a year where taxpayers will not be receiving any TABOR refund, surely Coloradans must be regretting paying less in taxes.
To the uninformed (and those predisposed-to-self-guilt), this may sound like a reasonable argument.
However, the article’s argument is deeply flawed and makes a disconcerting implication.
Words versus actions
When critics argued against lowering the state ‘s flat income tax rate, it was supposedly due to concerns about recession and maintaining the state’s ability to fund essential services.
Unfortunately for legislators and their media benefactors, actions speak louder than words.
The real reason legislators liked keeping TABOR refunds so high was to create and augment special-interest tax breaks.
Rather than cutting large refund checks to Coloradans as a whole, they could instead funnel the excess money to government-approved special interests.
Although Governor Jared Polis campaigned on reducing these special interest tax breaks, the state’s tax expenditures instead exploded under his watch.
What is implied
When a flat income tax is reduced, it lowers taxes for all Coloradans, not just those who curry favor at the statehouse.
On the other hand, tax expenditures take money paid by all Coloradans and redistribute it to narrower and narrower special interests, as the number of loopholes increases.
The Sun article says the quiet part out loud, suggesting that when given the option to reduce revenue, it is preferable for only a select few narrow interest to benefit from excess taxes–paid by all Coloradans–and that it is the gold-dome central planners who should make those decisions. The income tax breaks to attract the Sundance Film Festival to Boulder being just one recent example.
Given the two extremes — hundreds of tax loopholes and an opaque tax code on one side versus broad-based income tax relief on the other — it is unsurprising that Coloradans eagerly twice voted to reduce the income tax, and equally unsurprising that the legislature does not bother to ask voters to approve special interest tax breaks.
What is surprising is the Sun’s apparent inability to grasp the distinction.
