Colorado Proposition 116, Decrease Income Tax Rate from 4.63% to 4.55% Initiative (2020)

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Colorado Proposition 116
Flag of Colorado.png
Election date
November 3, 2020
Topic
Taxes
Status
Approveda Approved
Type
State statute
Origin
Citizens


Colorado Proposition 116, the Decrease Income Tax Rate from 4.63% to 4.55% Initiative, was on the ballot in Colorado as an initiated state statute on November 3, 2020. It was approved.

A "yes" vote supported decreasing the state income tax rate from 4.63% to 4.55% for individuals, estates, trusts, and foreign and domestic C corporations operating in Colorado.

A "no" vote opposed decreasing the state income tax rate, thereby maintaining the current rate of 4.63% for individuals, estates, trusts, and foreign and domestic C corporations operating in Colorado.


Election results

Colorado Proposition 116

Result Votes Percentage

Approved Yes

1,821,702 57.86%
No 1,327,025 42.14%
Results are officially certified.
Source

Reactions

The following is a list of reactions to the approval of Proposition 116:

  • Colorado Governor Jared Polis (D) said, "We would love to cut the income tax more. But even with what the voters did, we’re interested in working with them to backfill it by eliminating tax loopholes and tax expenditures, to make sure that there's no revenue loss to the state by reducing the income tax level."[1]

Overview

How did Proposition 116 change the state income tax rate?

See also: Text of measure

Proposition 116 decreased the state income tax rate for individuals, estates, and trusts from 4.63% of federal taxable income to 4.55% for tax years commencing on and after January 1, 2020. The measure also reduced the tax rate for domestic and foreign C corporations operating in Colorado from 4.63% of Colorado net income to 4.55%.[2]

Who supported and opposed Proposition 116?

See also: Support, Opposition, and Campaign finance


President of the Independence Institute Jon Caldara and Colorado State Senator Jerry Sonnenberg (R) sponsored the initiative. Sonnenberg said, “Small business owners all over Colorado are feeling the pain of these shutdowns, and their incomes have suffered as a result. In many rural communities, there are no big-box stores, just small businesses. An across the board income tax rate reduction will allow these business owners and their employees to keep and spend more of their own money. State government doesn’t need to increase its already bloated budget.” Caldara said, “Coronavirus has crippled our state. Colorado needs to get moving again. Desperately. We must energize our economy. And in order to do that people need to be able to use more of their own money. It’s time to lower taxes. The state legislature could do it. But they won’t. So, we will do it for them." Ballotpedia identified two committees registered to support the initiative: Energize our Economy (306 Real Fair Tax) and Americans for Prosperity Colorado Issue Committee. Together, the committees reported $1.55 million in contributions. The top three donors (which gave 99.64% of the total contributions) were Unite for Colorado, Independence Institute, and Colorado Rising State Action.

Protect Colorado's Recovery and Fair Tax Colorado registered to oppose the measure. The committees reported $3.19 million in contributions. The top donor was the North Fund, which provided $750,000. Great Education Colorado also opposed the measure and said the initiative "is bad news for Colorado: in the midst of a recession, massive job loss, and a diminishing tax base, education and other public services have already suffered near irreparable damage. We cannot afford to lose more funding."[3]

Text of measure

Ballot title

The ballot title for Proposition 116 was as follows:[2]

Shall there be a change to the Colorado Revised Statutes reducing the state income tax rate from 4.63% to 4.55%?[4]

Summary and analysis

The summary and analysis provided for this measure in the 2020 State Ballot Information Booklet are available on page 46 at this link.

Fiscal impact statement

The fiscal impact statement was as follows:[5]

State revenue. Proposition 116 reduces state General Fund revenue by an estimated

$203 million in state budget year 2020‑21 and $154 million in state budget year 2021‑22. The first-year estimate includes the measure’s full impact for tax year 2020 and half of its impact for tax year 2021 due to the timing of the change in the tax rate.

State spending. The measure is expected to increase state spending by about $15,000 to administer the tax rate change. By reducing tax revenue, Proposition 116 reduces the amount available to be spent or saved beginning in state budget year 2020-21.

Taxpayer impacts. All taxpayers will pay 1.7 percent less in state income tax, though the impact in dollar terms will vary by income. On average, individual income taxpayers will pay $37 less in individual income taxes for tax year 2020.[4]

Full text

Readability score

See also: Ballot measure readability scores, 2020
Using the Flesch-Kincaid Grade Level (FKGL and Flesch Reading Ease (FRE) formulas, Ballotpedia scored the readability of the ballot title and summary for this measure. Readability scores are designed to indicate the reading difficulty of text. The Flesch-Kincaid formulas account for the number of words, syllables, and sentences in a text; they do not account for the difficulty of the ideas in the text. The Colorado Title Board wrote the ballot language for this measure.


The FKGL for the ballot title is grade level 9, and the FRE is 62. The word count for the ballot title is 18, and the estimated reading time is 4 seconds.


Support

Real Fair Tax campaign logo

Real Fair Tax led the campaign in support of the initiative.[6]

Supporters

Officials

Political Parties

Organizations

  • Americans for Prosperity-Colorado
  • Americans for Tax Reform
  • Colorado Rising State Action
  • Colorado Union of Taxpayers
  • Independence Institute
  • Unite for Colorado

Individuals


Arguments

  • Colorado State Senator Jerry Sonnenberg (R): “Small business owners all over Colorado are feeling the pain of these shutdowns, and their incomes have suffered as a result. In many rural communities, there are no big-box stores, just small businesses. An across the board income tax rate reduction will allow these business owners and their employees to keep and spend more of their own money. State government doesn’t need to increase its already bloated budget.”
  • Dustin Zvonek, CEO of Unite for Colorado: “During these challenging times, we need to do everything we can to revive our economy. By lowering taxes, and protecting our fair flat tax structure, this measure will provide much needed economic relief for Colorado families.”
  • Jesse Mallory, director of the Americans for Prosperity-Colorado Issue Committee: "Right now, who needs money more - politicians, or everyday Coloradans? Reducing the state income tax would help keep more money in the pockets of hard-working Coloradans to help make ends meet, support their families, and invest in their communities."
  • Jon Caldara, President of the Independence Institute and initiative sponsor: “Coronavirus has crippled our state. Colorado needs to get moving again. Desperately. We must energize our economy. And in order to do that people need to be able to use more of their own money. It’s time to lower taxes. The state legislature could do it. But they won’t. So, we will do it for them."
  • Colorado Rising State Action: "This is a state income tax cut for every Coloradan from a rate of 4.63% to 4.55%. It’s simple, and allows people to keep more of their hard-earned money, which is especially helpful during this economic recession."

Official arguments

  • Official Blue Book argument: "1) At a time when households and businesses are struggling to make ends meet, Proposition 116 leaves more money in the pocket of every taxpayer. Allowing taxpayers to keep more of their earnings will promote spending, business investment, and employment. 2) After years of growth in the state’s budget, the state government can handle a small tax decrease to provide relief to families and businesses. Even with the tax reduction under Proposition 116, state revenue is expected to increase in the next budget year; the measure only modestly slows the rate by which it will grow. Households that are struggling and foregoing basic purchases need their earnings more than the state government does."


Opposition

FairTaxColorado.JPG

Fair Tax Colorado led the campaign in opposition to Proposition 116.

Opponents

Organizations

  • Bell Policy Center
  • Colorado Children's Campaign
  • Democracy for America
  • Great Education Colorado
  • Progress Now Colorado


Arguments

  • Great Education Colorado: "Initiative 306 ... is bad news for Colorado: in the midst of a recession, massive job loss, and a diminishing tax base, education and other public services have already suffered near irreparable damage. We cannot afford to lose more funding."
  • Fair Tax Colorado: "Colorado already cut $3.3 billion from our budget this year. This 25% total cut has been devastating for hundreds of thousands of Coloradans. Prop 116 would demand another $154 million cut from our budget. The majority of Prop 116's benefits ($90 million) would go to the top 3% of Coloradans earners. For example, someone making $1 million will receive $800, while average Colorado taxpayers will only see $37 in tax savings. How much will Prop 116 cost us? The decrease in revenue is equivalent to sending 18,160 children to school for a year or the cost of the Senior Homestead and Disabled Veteran Property Tax Exemption, a lifeline for more than 250,000 older and disabled Coloradans."
  • Bell Policy Center analyst Joshua Mantell: "Proposition 116 – by giving significantly larger tax cuts to those at the top of the income ladder – will not significantly help those Coloradans who need it most. At a time when the wealthiest Coloradans are increasing their wealth, a tax cut that greatly benefits the rich is not a solution to the economic problems facing Coloradans."

Official arguments

  • Official Blue Book argument: "1) Reducing state revenue will compound the impact of significant budget cuts already being made to education, transportation, health care programs, and other state services as a result of the current economic crisis. Additional loss of state revenue will cause layoffs and reduce critical state services, further hurting Colorado’s economy and quality of life. Now is not the time to reduce state revenue further. 2) Most of the measure’s benefits will go to only a very small population of very wealthy taxpayers, including corporations. About 75 percent of taxpayers will receive a tax cut of less than $50 per year. Comparatively, those with incomes over $500,000, representing less than 2 percent of taxpayers, will receive over half of the total tax savings."


Campaign finance

See also: Campaign finance requirements for Colorado ballot measures
The campaign finance information on this page reflects the most recently scheduled reports processed by Ballotpedia, which covered through November 30, 2020.


Cash Contributions In-Kind Contributions Total Contributions Cash Expenditures Total Expenditures
Support $2,255.72 $1,553,952.61 $1,556,208.33 $11.10 $1,553,963.71
Oppose $2,859,570.38 $334,106.02 $3,193,676.40 $2,859,570.38 $3,193,676.40

Ballotpedia identified two committees registered to support the initiative: Energize our Economy (306 Real Fair Tax) and Americans for Prosperity Colorado Issue Committee. Together, the committees reported $1.55 million in contributions and $1.55 million in expenditures. The top three donors were Unite for Colorado, Independence Institute, and Colorado Rising State Action. Americans for Prosperity Colorado Issue Committee is also supporting Proposition 117.[7]

Protect Colorado's Recovery and Fair Tax Colorado registered to oppose Proposition 116 as well as Proposition 117. The committees reported $3.19 million in contributions and $3.19 million in expenditures.[7]

Support

The following table includes contribution and expenditure totals for the committee in support of the initiative.[7]

Committees in support of Proposition 116
Committee Cash Contributions In-Kind Contributions Total Contributions Cash Expenditures Total Expenditures
Americans for Prosperity Colorado Issue Committee $0.00 $786,919.27 $786,919.27 $0.00 $786,919.27
Energize our Economy (306 Real Fair Tax) $2,255.72 $767,033.34 $769,289.06 $11.10 $767,044.44
Total $2,255.72 $1,553,952.61 $1,556,208.33 $11.10 $1,553,963.71

Donors

The following were the top donors to the support committees.[7]

Donor Cash Contributions In-Kind Contributions Total Contributions
Americans for Prosperity $0.00 $786,919.27 $786,919.27
Unite for Colorado $0.00 $664,996.25 $664,996.25
Colorado Rising State Action $50,000.00 $0.00 $50,000.00
Independence Institute $0.00 $38,997.05 $38,997.05
Madsen and Associates $0.00 $5,000.00 $5,000.00

Opposition

The following table includes contribution and expenditure totals for the committee in opposition to the initiative.[7]

Committees in opposition to Proposition 116
Committee Cash Contributions In-Kind Contributions Total Contributions Cash Expenditures Total Expenditures
Protect Colorado's Recovery $2,066,002.35 $128,145.26 $2,194,147.61 $2,066,002.35 $2,194,147.61
Fair Tax Colorado $793,568.03 $205,960.76 $999,528.79 $793,568.03 $999,528.79
Total $2,859,570.38 $334,106.02 $3,193,676.40 $2,859,570.38 $3,193,676.40

Donors

The following were the top donors to the opposition committees.[7]

Donor Cash Contributions In-Kind Contributions Total Contributions
North Fund $750,000.00 $0.00 $750,000.00
Strategic Victory Fund $500,000.00 $0.00 $500,000.00
Colorado Fund for Children and Public Education $200,000.00 $0.00 $200,000.00
Sixteen Thirty Fund $200,000.00 $0.00 $200,000.00
Merle Chambers $106,000.00 $0.00 $106,000.00
Conservation Colorado $100,000.00 $740.91 $100,740.91

Methodology

To read Ballotpedia's methodology for covering ballot measure campaign finance information, click here.

Media editorials

See also: 2020 ballot measure media endorsements

Support

If you are aware of any media editorials that should be included here, please send an email with a link to [email protected].

Opposition

  • Steamboat Pilot & Today Editorial Board: "We recommend a 'no' vote. We don’t believe a pandemic is the right time for what is an immaterial tax cut — $40 a year for someone making $50,000 per year — and believe that a thoughtful, comprehensive reform package that offers reasonable taxpayer benefits without gutting government revenue is the better path."
  • Colorado Springs Indy Editorial Board: "Proposition 116 would permanently lower Colorado’s income tax rate to 4.55 percent from 4.63 percent. That’s not trivial; it would compound the impact of significant budget cuts the Legislature has already made to education, transportation, health care and other state services as a result of the current COVID-caused economic crisis. Additional loss of state revenue will lead to layoffs and reduce critical state services, further hurting Colorado’s economy and quality of life. Now is not the time to reduce state revenue further. ... Vote No on Prop 116."
  • Durango Herald Editorial Board: "Proposition 116 would decrease the state income tax rate from 4.63% to 4.55%. But now is when the state, with its growing population and commitments to education, Medicare, and transportation, needs the full tax revenue. No on Proposition 116."
  • Boulder Weekly Editorial Board: " ... it’s clear that this measure will only further hamper the state’s budget and its ability to provide essential public services, with minimal savings for the average Coloradan. Vote no."


Polls

See also: Ballotpedia's approach to covering polls and 2020 ballot measure polls

In an October 2020 poll conducted by Daily Kos and Civiqs, 1,013 likely voters were asked the following question:[8]

If the election were held today, how would you vote on state Proposition 116, which would decrease the state income tax rate from 4.63% to 4.55%?[4]

Poll results are shown below.

Colorado Proposition 116
Poll Yes NoUnsureMargin of errorSample size
Daily Kos/Civiqs poll
10/11/20 - 10/14/20
51.0%35.0%14.0%+/-3.61,013
Note: The polls above may not reflect all polls that have been conducted in this race. Those displayed are a random sampling chosen by Ballotpedia staff. If you would like to nominate another poll for inclusion in the table, send an email to [email protected].


Background

Colorado individual income tax rate history

Prior to 1987, the individual income tax rates were graduated, meaning those with higher incomes paid higher taxes, and those with lower incomes paid less in taxes. The Colorado individual income tax rate has been a flat tax rate since 1987. The flat tax was 5% from 1987 to 1998. It was lowered to 4.75% in 1999. The rate has been 4.63% since 2000. According to the Colorado Legislative Council Staff, the rates were lowered to "reduce the TABOR surplus."[9]

The following table shows the history of Colorado's individual income tax rates.[9]

Colorado individual income tax revenue

The following table shows income tax revenue in Colorado from 1998 through 2019.[9]

Types of individual income tax rates in other states

As of 2019, 32 states had graduated income tax rates, nine states had a flat tax rate, two states (Tennessee and New Hampshire) only taxed income from dividends and rent, and seven states did not have an income tax. As of 2019, flat tax rates ranged from 3.1% in Pennsylvania to 5.25% in North Carolina.[9][10]

The following map from the Tax Foundation shows income tax rates by state.[11]

Click "Show" to expand the map.

Colorado corporate income tax rate history

In Colorado, C corporations must pay a tax on the Colorado net income. The following table shows the history of Colorado's corporate income tax rates since the corporate income tax was enacted in 1937. The corporate income tax rate was a flat rate of 4% from 1937 to 1946. The rate was a flat rate of 5% from 1947 to 1980. From 1981 to 1993, the rates were graduated. From 1993 to 1998, the rate was returned to a flat rate of 5%. The flat rate was decreased to 4.75% in 1999 and to 4.63% in 2000.[12]

Colorado corporate income tax revenue

The following table shows the history of Colorado's corporate income tax revenue from 1998-99 to 2018-19.[12]

Types of corporate income tax rates in other states

As of 2019, 44 states and Washington, D.C., had a corporate income tax. Nevada, Ohio, Texas, and Washington levy a tax on gross receipts instead of levying a tax on corporate income. South Dakota and Wyoming do not levy a corporate income or gross receipts tax. Of the 44 states with a corporate income tax, 32 states and Washington, D.C., levied a flat corporate income tax rate and 12 states levied a graduated tax rate.[12]

The following map from the Tax Foundation shows corporate income tax rates by state.[13]

CorporateIncomeTaxRates2020.JPG

Tax policies on the ballot in 2020

See also: Taxes on the ballot

In 2020, voters in 14 states voted on 21 ballot measures addressing tax-related policies. Ten of the measures addressed taxes on properties, three were related to income tax rates, two addressed tobacco taxes, one addressed business-related taxes, one addressed sales tax rates, one addressed fees and surcharges, and one was related to tax-increment financing (TIF).

Click Show to read details about the tax-related measures on statewide ballots in 2020.

Path to the ballot

See also: Laws governing the initiative process in Colorado

The state process

In Colorado, the number of signatures required to qualify an initiated state statute for the ballot is equal to 5 percent of the total number of votes cast for the office of Colorado secretary of state in the preceding general election. State law provides that petitioners have six months to collect signatures after the ballot language and title are finalized. State statutes require a completed signature petition to be filed three months and three weeks before the election at which the measure would appear on the ballot. The Constitution, however, states that the petition must be filed three months before the election at which the measure would appear. The secretary of state generally lists a date that is three months before the election as the filing deadline.

The requirements to get an initiated state statute certified for the 2020 ballot:

The secretary of state is responsible for signature verification. Verification is conducted through a review of petitions regarding correct form and then a 5 percent random sampling verification. If the sampling projects between 90 percent and 110 percent of required valid signatures, a full check of all signatures is required. If the sampling projects more than 110 percent of the required signatures, the initiative is certified. If less than 90 percent, the initiative fails.

Details about this initiative

  • Jon Caldara of the Independence Institute and Jerry Sonnenberg filed the initiative on April 3, 2020. A ballot title was set for it on April 15, 2020.[2]
  • Proponents reported submitting around 197,000 signatures on July 31, 2020.[34]
  • The measure was certified for the ballot on August 17, 2020. The Colorado Secretary of State's office found that, of the 198,538 signatures that were submitted, 140,058 were projected to be valid.[35]
  • Changes to Colorado ballot initiative process due to COVID-19: On May 17, 2020, Colorado Governor Jared Polis (D) signed Executive Order D 2020 065, which authorized the Colorado Secretary of State to establish temporary rules allowing for ballot initiative petitions to be signed through mail and email. The order also temporarily suspended the state law requiring signatures to be submitted six months after ballot language finalization. Under the order, signatures for 2020 Colorado initiatives were due by August 3, 2020.[36] Legal challenges were filed against the order, specifically challenging the mail and email signature gathering provisions. Those provisions of the order were ultimately struck down by the Colorado Supreme Court on July 1, 2020, meaning proponents needed to collect signatures in person.[37][38] [39][40][41]


Cost of signature collection:
Sponsors of the measure hired an unknown petition gathering company to collect signatures for the petition to qualify this measure for the ballot. A total of $664,996.25 was spent to collect the 124,632 valid signatures required to put this measure before voters, resulting in a total cost per required signature (CPRS) of $5.34.

How to cast a vote

See also: Voting in Colorado

Click "Show" to learn more about voter registration, identification requirements, and poll times in Colorado.

See also

External links

Support

Opposition

Footnotes

  1. Colorado Public Radio, "‘A Great Outcome For Colorado’: Gov. Polis Sees Priorities Pass At The Ballot Box," accessed November 17, 2020
  2. 2.0 2.1 2.2 Colorado Secretary of State, "2019-2020 Initiative Filings, Agendas & Results," accessed April 17, 2020
  3. Great Education Colorado, "Tell the Governor and Legislators: Protect Schools from an Unfair Tax Cut!" accessed August 20, 2020
  4. 4.0 4.1 4.2 4.3 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
  5. Colorado State Legislature, "2020 Blue Book," accessed September 21, 2020
  6. Real Fair Tax, "Home," accessed August 24, 2020
  7. 7.0 7.1 7.2 7.3 7.4 7.5 Colorado Secretary of State TRACER, "Campaign finance committee search," accessed August 4, 2020
  8. Civiqs, "October 2020 Colorado poll," accessed October 19, 2020
  9. 9.0 9.1 9.2 9.3 Colorado Legislative Council Staff, "Individual Income Tax," accessed August 14, 2020
  10. The Balance, "States With Flat Income Tax Rates for Tax Year 2019," accessed August 25, 2020
  11. Tax Foundation, "Individual Income Tax Rates and Brackets for 2020," accessed August 25, 2020
  12. 12.0 12.1 12.2 Colorado Legislative Council Staff, "Corporate Income Tax," accessed August 25, 2020
  13. Tax Foundation, "State Corporate Income Tax Rates and Brackets for 2020," accessed August 25, 2020
  14. Arizona Secretary of State, "Initiative 31-2020," February 14, 2020
  15. Colorado Secretary of State, "2019-2020 Initiative Filings, Agendas & Results," accessed April 17, 2020
  16. Illinois State Legislature, "Senate Joint Resolution Constitutional Amendment 1," accessed May 2, 2019
  17. Illinois State Board of Elections,"Committee Search," accessed May 28, 2019
  18. Alaska Division of Elections, "Alaska's Fair Share Act," accessed January 13, 2020
  19. Anchorage Daily News, "Group says it has enough signatures to put Alaska oil tax initiative on ballot," January 14, 2020
  20. APOC, "Online Reports," accessed January 7, 2020
  21. Nebraska Secretary of State, "Initiative Petition text," accessed August 22, 2019
  22. California Attorney General, "Initiative 19-0008," September 17, 2019
  23. California the Legislative Analyst's Office, "A.G. File No. 2019-0008," February 5, 2018
  24. California State Legislature, "Assembly Concurrent Resolution 11," accessed May 8, 2019
  25. Colorado General Assembly, "SCR 20-001," accessed June 10, 2020
  26. Arkansas State Legislature, "House Joint Resolution 1018," accessed March 7, 2019
  27. UA Little Rock Public Radio, "Arkansas Governor Signs $95 Million Highway Funding Bill Into Law," accessed March 25, 2019
  28. Arkansas Ethics Commission, "Filings," accessed August 18, 2020
  29. Colorado State Legislature, "House Bill 20-1427," accessed June 15, 2020
  30. Oregon State Legislature, "HB 2270," accessed June 25, 2019
  31. Colorado Secretary of State, "2019-2020 Initiative Filings, Agendas & Results," accessed February 10, 2020
  32. Nebraska State Legislature, "LR14CA," accessed April 5, 2019
  33. On May 17, 2020, Colorado Governor Jared Polis (D) signed Executive Order D 2020 065, which temporarily suspended the state law requiring signatures to be submitted six months after ballot language finalization. Under the order, signatures for 2020 Colorado initiatives were due by August 3, 2020.
  34. The Center Square, "Signatures turned in for ballot initiatives on voter approval of fees, income tax cut measures," accessed July 31, 2020
  35. Colorado Secretary of State, "Proposed Initiative #306 (“State Income Tax Rate Reduction”) Qualifies For 2020 General Election Ballot," accessed August 18, 2020
  36. Colorado Governor Jared Polis, "Gov. Polis Signs Executive Orders to Protect Access to Ballot & Ensure Elections Can Proceed Safely," accessed May 18, 2020
  37. Colorado Concern, "Lawsuit against Polis' executive order," accessed May 19, 2020
  38. Denver Post, "Colorado group seeking to ban late-term abortions sues over governor’s order," accessed May 22, 2020
  39. Reporter Herald', "Court upholds Colorado Governor Polis’ power to change ballot initiative rules," accessed May 29, 2020
  40. Colorado Politics, "Colorado Supreme Court to hear challenge to Polis order on petition-gathering," accessed June 12, 2020
  41. Fort Morgan Times, "Colorado Supreme Court rules against Polis on signatures for ballot measures," accessed July 1, 2020
  42. Colorado Secretary of State, "Mail-in Ballots FAQs," accessed July 16, 2024
  43. Colorado Revised Statutes, "1-7-101," accessed July 16, 2024
  44. 44.0 44.1 Colorado Secretary of State, "Voter Registration FAQs," accessed July 16, 2024
  45. Colorado Secretary of State, "Go Vote Colorado," accessed July 15, 2024
  46. Colorado Secretary of State, "Acceptable Forms of Identification," accessed July 17, 2024