Coloradans have been waiting for the proposed changes in the way the state funds our education system. Most of the bill deals with how education funds are dispersed. But, these massive reforms to the state education fund come with a hefty price tag – estimates are at the one billion dollar plus mark.
On Friday, more than 25 ballot initiatives to pay for this effort were submitted to the legislature’s administrative office for consideration on the 2013 November ballot. All of the funding proposals depend on increasing state income tax percentages for most taxpayers.
Some of the initiatives rely on a flat tax increase across the board of .72%. Other initiatives rely on a tiered system of tax increases. The most punitive of the bunch would increase income taxes by .12% up to $50,000, then by .37% on incomes from $50,000 through $75,000, then by .87% from $75,000 through $100,000, by 1.37% from $100,000 through $200,000, and by 2.27% for income over $200,000.
Currently, Colorado’s state income tax rate resides at 4.63% of federally taxable income. This means that the new state income tax rates would be 4.75% up to $50,000, 5% from $50,000 through $75,000, 5.5% from $75,000 through $100,000, 6% from $100,000 through $200,000, and 6.7% for income over $200,000.
At 4.63%, Colorado’s state personal income tax is somewhere in the middle, according to the Federation of Tax Administrators. With a proposed highest rate at 6.7%, Colorado’s tax rate begins to look a little more like Delaware or Connecticut. The difference is that the tax rates in these two states start at about half of Colorado’s proposed tax rates.
Education reform is a buzz word that sounds like a great idea, but does this bill contain reforms that will actually improve outcomes or is this just another union pay off? And, can Colorado’s families afford a huge tax hike at a time when inflation on everyday goods is rising, housing costs are going up and we still have high unemployment?