Colorado Prop 103 deception
Like many Coloradans, I received a robo-call supporting Proposition 103, in which the disembodied female supporter describes 103 as a "five-year time out from school cuts." Nowhere does the robo-call mention the huge ($3 billion) tax hike that 103 actually represents.
A quick check of the official "Blue Book" election guide which describes statewide ballot measures says this about Proposition 103:
Proposition 103 proposes amending the Colorado statutes to:
- increase the state income tax rate from 4.63 to 5.0 percent for five years, starting January 1, 2012;
- increase the state sales and use tax rate from 2.9 to 3.0 percent for five years, starting January 1, 2012; and
- require the state legislature to spend the money on public education by increasing funding above the amount in budget year 2011-12.
In other words, the first two of the three bullet points about the measure discuss the fact that is is a tax hike, and an enormous one at that.
An organization called "Save Colorado Jobs" has mounted a campaign against Prop 103, using the dastardly tactic of actually telling people what 103 is and what it is likely to do to the Colorado economy. (I will try to get Save Colorado Jobs' Chairman Victor Mitchell on my radio show sometime soon.)
Prop 103 aims to increase taxes by $3 billion over five years, a nearly 9% annual increase over the state budget's FY2011-2012 numbers. If Colorado were to pass a tax hike -- which we won't -- it would be one of the only states in the nation stupid enough to raise taxes during an extremely weak economy and during these times of intense competition between states to attract job creators.
But there's another point to be made here: Just under 40% of all state General Fund expenditures go to K-12 education. How can 40% of a state's spending toward one thing not be enough? The answer is that it is more than enough, and that it is the system itself, and particularly the impact of teachers unions, which is the problem. This is why the Colorado Education Association supports Prop 103; the extra money would mask the damage they our doing to our state and our children through their massive bureaucracies and intense opposition to merit pay and real assessments of teach performance.
Speaking of the CEA, their web site links to a site called Vote Yes on 103, which is owned and controlled by the Colorado Center on Law and Policy, a left-wing Denver-based think tank and activist organization. Earlier this year, the group withdrew its proposals for six tax increases in the state after being unable to generate any serious support.
The site has a page which calculates your estimated increase in income and sales taxes, but the math has a serious flaw: It assumes a constant percentage of one's gross income to be taxable regardless of your income level and assumes a constant percentage of one's gross income to be spent on items which have sales tax applied, again regardless of your income level. (You can see the actual calculations at the end of this note.)
In particular, the site assumes that 58% of one's gross income ends up being taxable and that 23% of one's gross income ends up being spent on items which have sales tax applied.
But these numbers vary widely. The percentage of one's income which is taxable generally increases with one's income because people don't usually increase deductions (including the size of one's mortgage) in direct proportion to increases in income. For example, someone who makes $300,000 per year does not necessarily have a 50% more expensive house than someone who makes $200,000 per year. Therefore, the higher the income assumed, the more this web site understates what the income tax increase will be. Furthermore, at low income levels, such as couple earning $18,000 per year, the form overstates what the income tax increase would be because that couple would have zero federal taxable income (the number on which state tax is based.)
The other side of the coin is that the calculation probably overstates the sales tax increase for higher incomes but understates the sales tax increase for lower incomes, as those with higher incomes are able to save more while those with lower incomes have to spend most or all of their incomes. This question is of course dependent on what items are excluded from sales taxes, as food is in Colorado. Nevertheless, the fundamental principle applies.
The income tax portion of Prop 103 is really where the money is, with the Blue Book analysis showing that over 85% of the $3 billion estimated to be raised will come from individual and business income taxes, and only about 14% from sales and use taxes.
And therefore, the Yes on 103 web site's assumption regarding only 58% of a person's or family's income being taxable deserves serious scrutiny, with their math understating the tax hike for upper income earners, which is to say for the people who already pay most of the state and the nation's taxes.
On the one hand, I'm tempted to joke that perhaps the state does need the money for education if these are our citizens' math and logic skills. But the reality of the situation is more likely that this, like the robo-call which never mentions the tax hike that Prop 103 really is, is an intentional piece of deception by leftists for whom the end -- taking more of our money -- justifies the means.
My friend Kelly Maher found the pro-103 robo-call as deceptive as I did, and explains it clearly here:
I took Kelly's advice and penned a note to State Senator Rollie Heath, though I can't say I asked him to be more "fair and honest", as Kelly asked, since I know that he is incapable of that. Instead, I wrote this:
Dear Senator Heath,
I received a robo-call from one of the groups supporting your Proposition 103. It never mentions the fact that 103 would constitute a massive increase on Coloradans.
In fact, even in the final draft of the "Blue Book" language of the Proposition, the first two of its three bullet points involve tax hikes.
I hope you realize that you are not fooling anybody, and I'm actually glad you are putting forward 103 because it serves to remind Colorado voters that Democrats have no ideas other than to raise taxes, and have no loyalty other than to public sector unions.
Furthermore, the way you are promoting the Proposition serves to remind us that you and your ilk will say absolutely anything to get your hands on more of our money.
For those of you wondering about the pro-103 web site's math, here is the code which I grabbed from their web page. Note how "b" is used as the number to be multiplied by the tax rate to calculate your new income tax burden, while "e" is the number used to calculate the new sales tax burden.
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