OUR VIEW: Like turning your faucet on high with the drain plug pulled, new taxes won't fill up the government bathtub because jobs will go down the drain.
Senator Rollie Heath's Tax Trolly Team (minus the 4th grade class) are supporting a massive $3 Billion tax hike over five years in the name of education spending and increased government revenues. A new study out by a respected national economist, with a track record of successful economic modeling based on tax increases, suggests that the tax increase will kill 119,000 jobs and even cause people to leave the state.
Some have questioned the 119,000 number, but we checked with those responsible for publishing the study who confirmed with the study's author that, in fact, the 119,000 number is correct. We're glad to see liberal blog trolls on here pointing out that the tax increase would only kill 30,000 jobs. It just confirms our theory that liberal tax hikers think job losses are okay, as long as they have more tax dollars of yours to spend.
But the problem with that perverse economic theory — give me more of your money, even if it causes your company to lay you off — is it doesn't even pan out as proponents plan. If the aim is to increase government revenues for education, then Rollie Heath's tax hike fails on both accounts. We've covered previously how it can't be guaranteed for education. As the Pueblo Chieftain editorial board said, "we've heard that song-and-dance before" on earmarking money for education, and it doesn't work. The next General Assembly can spend government revenue in many ways other than education — just look at Ref C and Bill Ritter's mill levy freeze property tax hike.
On the other point, that raising taxes doesn't raise the revenue promised by proponents of the tax hike, take a gander at real life examples from other states that raised taxes in the hopes of more government revenue. The effects were just what this study predicts would happen if Heath's tax increase passed: job loss and less government revenue than expected.
In addition to the adverse impacts on economic growth, it is unlikely that a steep rise in income tax rates would produce a similarly steep rise in government revenues. California enacted a wide range of tax increases in 2009 in hopes of balancing the state’s budget. However, revenues came up billions of dollars short of projections (Goldmacher, 2010). In 2010, Oregon passed two measures targeting corporations and upper income individuals for tax increases, retroactive to 2009. In the wake of the measures, Oregon’s employment in 2010 was approximately 2 percent lower (28,000 fewer employed) than it would have been if the measures had not passed (Fruits and Pozdena, 2009; Office of Economic Analysis, 2011). In addition, the state’s Legislative Revenue Office reports that revenues from the individual income tax increase will be one-third lower than originally projected (Esteve, 2010).
Those who work are in fact taxed more, but those 119,000 people who will lose their job won't get taxed at all. Therefore, the new tax revenue generated will be less than Heath is projecting.
Are voters really willing to fire 119,000 Coloradans with the realization that they will get substantially less government revenue than the tax hike proponents are promising? We highly doubt it.