And how, at the same time, progressives duped them into massive tax increases elsewhere.
And how, at the same time, progressives duped them into massive tax increases elsewhere.
I n an election year where the political Left won nearly every ballot question and contested political race in the state, Colorado voters approved two conservative-backed ballot measures demanding fiscal restraint.
Proposition 116 reduces the state’s flat income-tax rate from 4.63 percent to 4.55 percent, and Proposition 117 requires the legislature to receive voter approval of large new government fees.
Most outcomes from Colorado’s 2020 ballot come as no surprise in a state now largely dominated by the Left. Democrats flipped a seat in the state senate while losing nothing. The Republican-to-Democrat ratio in the House remained unchanged. Voters rejected a ban on abortion after 22 weeks of gestation. The state agreed to join the National Popular Vote compact. Environmental activist groups won on Proposition 114, a measure to introduce gray wolves to the Colorado Rockies. The tax and fiscal issues, however, have left many Colorado policymakers and pundits baffled.
While voters approved a straightforward income-tax cut and a check on the creation of large new government fees, they also approved three separate tax increases. The tax cut amounts to about $160 million annually. When fully implemented, the tax increases will amount to anywhere between $1.4 and $1.8 billion annually — if not more. On the surface, the electorate appears to have some kind of split-personality disorder, but a closer look explains this apparent contradiction.
Colorado’s 2020 Conservative Tax Victories
The 2020 election proved a longstanding trend: Colorado voters support a more conservative fiscal and tax agenda and a more liberal social policy.
Coloradans like their relatively low taxes, they support their flat income tax, and they support the right granted them in their Taxpayer’s Bill of Rights (TABOR) to vote on tax increases. Their approval of Propositions 116 and 117 reaffirmed as much. So did their rejection of an initiative to repeal the state’s flat income tax in favor of a progressive graduated income tax, which would have increased tax revenues by $2 billion annually.
Despite opponents’ mounting a multimillion-dollar campaign — funded primarily by out-of-state donors — to confuse voters on these measures, Coloradans remained supportive of conservative tax policy. The tax-cut proposition benefited from very simple ballot language and support from our Democratic governor. The simple and honest message — amplified by organizations such as the Independence Institute, Colorado Rising Action, and Americans for Prosperity–Colorado — appealed to voters in every corner of the state. Indeed, pushing back against the deceptive negative propaganda of the Left proved successful.
No matter how many negative ads voters heard, the ballot language spoke for itself: “Shall there be a change to the Colorado Revised Statutes reducing the state income tax rate from 4.63% to 4.55%?” While the ballot language necessary for Prop.117 proved more technical, the message was simple and successful: Should Coloradans have the right to vote on large new government fees? The answer from voters was a resounding “yes” and “yes.”
So, if Coloradans maintain such strong support for conservative tax policy, why did they approve three measures that will massively increase taxes?
Colorado’s 2020 Tax Increases
Every tax increase was successfully framed primarily as a social issue — the official ballot language and its advocates either obscured or entirely disregarded the tax side at hand.
Proposition 118 creates a new payroll tax, which will generate $1.2 billion in revenues by fiscal year 2023–24, to pay for a mandatory paid family and medical leave program. It passed easily with 57.3 percent of the vote. This tax may, in fact, need to increase within a couple of years to prevent the program from going insolvent.
Amendment B, which passed with 57.4 percent of the vote, eliminates the Gallagher amendment to the state constitution — a protection against property-tax increases on homeowners that has been in place since the early ‘80s.
And Proposition EE will increase taxes on tobacco, cigarettes, and nicotine, generating about $170 million in new revenues annually. The measure includes a broad directive that funds be used for public education and programs to discourage youth smoking. Revenues will go into the fungible state general fund where the legislature can easily redirect them for other purposes.
Voters were not sold on these as tax increases and did not vote for them because they were tax increases. Rather, they voted on the social outcomes that these measures promised to deliver. When it came to the tax changes, however, proponents did not tell Coloradans the whole story in clear and honest terms.
Paid Family and Medical Leave
Proposition 118 was on the ballot because the state constitution requires that all new taxes receive voter approval. Yet the ballot language focused more on the creation of a new social program (paid family and medical leave) than on the matter of how to pay for it.
The ballot question began with a lengthy discussion of whether Colorado law should require businesses to provide paid family and medical leave to their employees. Buried beneath the description of these shiny new benefits came a brief discussion of “a premium of 0.9% of each employee’s wages.” So what about the outside messaging for and against the measure leading up to Election Day?
Not a penny of the millions raised in support of the measure went to educate voters on the impact it would eventually have on their taxes. Proponents, including allegedly nonpartisan public-policy think tanks, pitched the measure as pure benefit, as though it were free, omitting the taxation aspect entirely from their promotional literature.
Notably, over $8 million of the approximately $9 million raised to support the proposal came from Washington, D.C. Additional funds came from other out-of-state backers. Only a small portion of donations came from Colorado. Opponents of the measure raised only $785,000, almost all from Colorado-based donors.
Coloradans approved the $1.2 billion tax increase for paid leave as a social issue, not a tax or fiscal issue. The measure will nonetheless have devastating effects on the state’s economy.
Residential Property Tax
Similarly, proponents of Amendment B sold the measure to voters as a way to fund beloved services. In this case, the state legislature craftily and deliberately deceived voters to get it passed.
Because the state legislature referred the measure to the ballot, it also had the privilege of writing the ballot language. It begins, “Without increasing property tax rates . . .” While property-tax rates will not go up as an immediate result of the amendment, assessment rates will. These rates determine how much of a home’s value is taxed; therefore, an assessment-rate increase will translate to a property-tax increase without an attendant change in tax rates. So the legislature did not exactly lie, but as a British politician once (more or less) put it, was economical with the truth.
The carefully crafted, deceptive ballot language led voters to believe that a “yes” vote would redirect existing funds to “fire protection, police, ambulance, hospital, kindergarten through twelfth grade education, and other services” without raising taxes. It even implied that it would guarantee property taxes don’t go up when it included the line, “and to avoid automatic mill levy increases . . .” This sleight of hand duped taxpayers into a $490 million property-tax increase.
New “Sin” Taxes
Proposition EE promised to backfill revenue shortfalls to public education and then establish free universal preschool. Surprisingly, the ballot language began with an admission that the measure would increase existing taxes on cigarettes and tobacco and create a new tax on nicotine.
The explanation for overwhelming support of an obvious tax hike is simple: Voters will generally approve taxation of a political minority’s perceived vice, especially when they’re told it’s “for the sake of the children.” Supporters pleaded with voters to support the measure to improve education and protect the health our of youth. With a majority of Coloradans not standing to be affected by the policy change themselves, they won easily. Still, voters primarily approved it for the social policy, not the tax policy.
Takeaway
The lesson is this: When the drafters of ballot language mislead voters by burying the tax increase, when millions of dollars come flooding into the state in an effort to deceive voters about what a measure does, and when tax increases are sold only as social policy, Colorado voters will give their approval. But when Coloradans are presented with clear, simple, and honest accounts of what a measure does, they vote with conservatives and libertarians on tax policy. They support TABOR and our flat income tax, and they believe that their legislature should have to ask their permission if they want to increase taxes or government fees.
Coloradans are still fiscal conservatives at heart, and their approval of Propositions 116 and 117 proves that.