In a major win for progressive Democrats, Colorado voters this week approved a $2 billion tax hike on the highest earning households and corporations in order to expand social services and prevent further cuts to the state budget.
The decision brings a graduated income tax system back to Colorado for the first time since 1986, repealing a provision in the state constitution that required everyone to pay the same income tax rate, no matter how much money they make.
Amendment 87 was leading with 51.4% of the vote in favor and 48.6% opposed at 10:49 a.m. Friday, when The Associated Press called the race.
The measure, backed by a coalition of progressive advocacy groups, imposes six new tax brackets that will raise taxes on households and businesses making more than about $500,000, while cutting them on the first $100,000 people earn a year.
It will generate an estimated $2 billion annually that the legislature can spend on healthcare, public schools and childcare — an amount that could immediately reverse the state’s dismal budget outlook, with money left over to expand those services.
As a result, the legislature’s Joint Budget Committee will return to work next week on a spending plan that won’t require another $1.6 billion in budget cuts, as state fiscal analysts had feared. On Tuesday, voters also approved a separate measure, Proposition NN, which will allow the state to spend more money on education.
On their own, either measure would have been the largest infusion of new tax dollars for public services in Colorado since 2005’s Referendum C. Taken together, they represent a new era in Colorado politics, as Democrats look to expand spending on public services beyond the strict limits imposed by the Taxpayer’s Bill of Rights, or TABOR.
To overcome the state’s decades-long streak of opposing higher taxes, the progressive groups behind the measure tapped into simmering anger at the rich at a time when billionaires are accumulating wealth faster than ever and the middle class is struggling to afford the essentials.
Supporters declared victory on Thursday afternoon at a rally at La Raza Park in Denver.
“This campaign is historic,” said state Rep. Lorena Garcia, an Adams County Democrat. “We are finally demonstrating that Colorado voters aren’t happy with TABOR, but that Colorado voters want to invest in our future, in our kids, in our health, in our communities.”
“What is today? It’s tax the rich day,” she said to cheers from the crowd.
For a household with $75,000 in taxable income, taxes will go down by $275 a year. For a family making $550,000, taxes will go up $1,175 a year, while someone making $10 million annually will owe an additional $376,000 in taxes. The same changes will also apply to business profits.
The measure’s passage was a major defeat for conservatives and business groups, who said it would drive up consumer prices and increase financial pressure on businesses at an already difficult economic time.
“We are incredibly disappointed that Amendment 87 has passed,” Colorado Chamber of Commerce president and CEO Loren Furman said in a statement Friday. “Small business owners work their entire lives to achieve the American dream, but this measure will penalize them for achieving that dream.
“Many of these employers are already struggling with rising costs to make payroll and support their employees,” she said. “These tax increases will force businesses to make difficult decisions about wages, hiring and future investments.”
Seeking transformational change
Amendment 87 is likely to set off a race for funding at the state Capitol after years of budget cuts.
But supporters with the Protect Colorado’s Future Coalition say that while they hope Amendment 87 will prevent deep cuts to Medicaid services, they don’t want to see the money used only to preserve the status quo.
“I don’t think anyone wants to just use this money to backfill the existing growth of costs,” Chris deGruy Kennedy, co-chair of the Amendment 87 campaign, told The Colorado Sun in an interview. “We believe that this is a unique opportunity to make some transformational change for how working people, and children, and older adults experience our economy. And we gotta get it right.”
He wants to see the legislature set up interim committees to plan for big investments in the areas that Amendment 87 will fund: healthcare, education and childcare.
One idea he has is setting up a statewide childcare program with tuition that scales with family income.
“This was not an incremental proposal,” he said of Amendment 87. “We went big on purpose because we believed a big solution was necessary.”
There’s perhaps no area that will benefit more from this year’s election than K-12 education, which will also see an infusion of dollars from Proposition NN.
For Lisa Weil, the executive director of Great Education Colorado, Tuesday’s results were the culmination of a quarter century of fighting against “a state of scarcity.”
“What that’s meant for our school boards, for our school districts, for our teachers, is that they’re always doing the calculation: ‘You have to do more with less,’” Weil said at Thursday’s rally. “Should we work on increasing teacher pay, or should we try to reduce class sizes? Because we can’t do both.”
Now, she hopes, that will finally change.
“We can look in the eyes of elementary school students today and say, ‘You are going to graduate from a fully resourced high school,’” she said.
‘The wealthy can afford more’
Conservative groups and businesses spent heavily to defeat the measure, blanketing the airwaves with inaccurate ads that claimed the measure would have raised taxes on Social Security and veterans’ benefits. It will not.
Some top Democrats also came out against the measure, including Gov. Jared Polis, who said Amendment 87 would harm the economy, and his successor, Attorney General Phil Weiser, who said the measure didn’t give voters a clear enough description of how the state would spend the money.
But overwhelmingly, Democratic officials — and their voters — backed the measure and the economic philosophy it represented, favoring more public services and higher taxes on the rich over the conservative, low-tax ideology that has dominated Colorado for decades.
For Karen Vidana, a 22-year-old who works in retail, Amendment 87 was an easy sell.
“I just heard something about taxes helping people and I’m like, yes, yes, yes,” Vidana said Tuesday after casting her ballot in the Denver suburbs.
Jeff Wallace, a 67-year-old physician, said his “only reservation” in voting for it was whether state officials would spend the money where they promised.
“But I still (think) that a progressive income tax is fair for the average person,” he said after voting in Pagosa Springs. “The very wealthy can afford more.”
Others said they were deterred by the higher taxes.
Mackinzie Washington, a 32-year old landscape construction foreman, was on the fence, but ultimately voted no. “I’m for more taxes on corporations, but not the people, and they kind of bundled it together,” Washington, who is politically unaffiliated, said after casting his ballot in Westminster. “So you’re kind of stuck between a rock and a hard place there.”
In a separate vote, Coloradans defeated Proposition 136, a conservative ballot measure that sought to thwart Amendment 87’s higher tax brackets by setting a maximum state income tax rate of 4.4%.
Opponents of Amendment 87 far outspent supporters
The Protect Colorado’s Future Coalition was the main issue committee working to pass Amendment 87. It raised about $2.7 million in support of the measure.
The committee’s major donors included Stand for Children, a liberal political nonprofit that doesn’t reveal its donors; Merle Chambers, a Denver philanthropist and Democratic megadonor; and the New Era Colorado Action Fund, another liberal political nonprofit that doesn’t reveal its donors.
Colorado WINS, the union for state employees, was also a major donor to the group alongside the Bell Policy Center and Colorado Fiscal Institute, two liberal nonprofit think tanks.
Far more money was spent in opposition to 87 by a list of issue committees.
Don’t Price Us Out the most well funded committee opposing 87. It raised more than $4 million to fight the initiative, including $1.7 million from the American Prosperity Coalition, a conservative group that’s registered to a shipping store near Dallas; $775,000 from the Leadership for America Fund, another conservative group, that is registered to a shipping store in Oklahoma City; and $600,000 from the Denver Metro Chamber of Commerce.
Keep Colorado Affordable, another issue committee, raised about $3 million to oppose Amendment 87 and support Proposition 136 — a proposal that aimed to thwart the amendment’s tax hikes by limiting income taxes to their current level. The committee received $1.85 million from the GOPAC Election Fund, a federal super PAC that gives to Republican candidates and causes; $550,000 from the Denver Metro Chamber of Commerce; and $500,00 from the Colorado Chamber of Commerce’s campaign arm.
The Denver Metro Chamber of Commerce also spent $925,000 in opposition to Amendment 87 through the issue committee Let’s Go Colorado, while Americans for Prosperity, a national conservative political nonprofit that doesn’t disclose its donors, spent about $450,000 to fight 87 through an issue committee of its own.
In all, The Colorado Sun found about $2 million in donations from the Denver Chamber to groups opposing Amendment 87.
Finally, Brighter Colorado, an issue committee that backed several conservative ballot measures this year and opposed Amendment 87, raised about $6.1 million, most of it from conservative political nonprofits that don’t disclose their donors.
Colorado Sun staff writers Jesse Paul, Parker Yamasaki and Shannon Mullane contributed to this report.
This story previously appeared on The Colorado Sun.
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