How slashing Colorado’s income tax rate would increase economic disparities
Plus: Budget cuts continue. Colorado Capitol HR. Catching up with Jason Crow. Elizabeth Warren is coming to Colorado.
admin
????PROGRAMMING NOTE????: The Unaffiliated is moving back to publishing once a week on Fridays starting today. The change will allow us to make sure we are bringing you the best need-to-know information about Colorado politics and policy.
We’ll occasionally publish on Tuesdays when we have news that we can’t wait to share.
If you have questions or comments, please send them to jesse@coloradosun.com.
Further slashing Colorado’s income tax rate — or eliminating it altogether — would “increase disparities in economic outcomes,” according to an analysis by the legislature’s nonpartisan staff.
Families making more than $200,000 — about 8% of the state’s taxpayers — would stand to save an average of $608 if the rate were to drop to 4.25% from 4.4% and $17,844 if the state’s income tax was eliminated completely. Meanwhile, families in the lowest income bracket, earning up to $15,000 annually and representing 12% of the state’s taxpayers, would save an average of $5 under the rate reduction and $154 if the income tax were eliminated.
The analysis also found that Coloradans who are Black, Latino, Indigenous or belong to other racial minorities; are living with a disability; or live in a rural area would be more likely to experience lower tax savings.
The disparities aren’t necessarily surprising — Democrats and liberal interest groups have been warning as much for a long time. But the legislative staff analysis is the first time the state has provided a detailed glimpse into the effects of doing away with Colorado’s income tax.
Gov. Jared Polis is a proponent of eliminating Colorado’s income tax, siding with many Republican leaders in the state who would like to make that happen, too. Income tax revenue makes up the largest share of the general fund, generating an estimated $12.4 billion in the current budget year, which ends June 30.
The analysis by nonpartisan legislative staff was conducted for Senate Bill 138, which was introduced by Republican state Sen. John Carson of Highlands Ranch. The measure would have dropped the state’s income tax rate to 4.25% from 4.4% for tax years 2025 through 2034, and eliminated the state income tax starting in 2035.
It was rejected last week along party lines during its first committee hearing.
“Higher income earners, who tend to have a higher income tax liability, are more likely to experience after-tax income increases from tax savings under the bill,” the analysis said. “The bill provides larger tax savings for those with higher incomes, both in absolute amounts and proportionally to income.”
The caveat: “A reduced state income tax rate may stimulate economic activity that generates additional tax revenues and additional incomes for individuals and businesses,” the analysis said. “With higher post-tax income, these individuals may spend more on goods and services, increasing income to certain businesses. Corporations may invest tax savings on research and development or hire more employees.”
Senate Bill 138 may be gone, but discussions about further reducing the income tax rate are just beginning.
Conservative activist Michael Fields is pursuing two 2026 ballot measures that would slash the rate.
Initiative 20 would reduce Colorado’s individual and corporate income tax rates to 4.35% in 2027 and 4.2% in 2028, down from 4.4%. Initiative 21 would drop the rates to 4.2% starting in 2027.
Welcome to The Unaffiliated, the politics and policy newsletter from The Colorado Sun. Each week, we take you inside the political arena to deliver news and insights on Colorado politics. Keep reading for even more exclusive news.
If you’re reading this newsletter but not signed up for it, here’s how to get it sent directly to your email inbox. Please send feedback and tips to jesse@coloradosun.com.
HOW THE REST OF THE COUNTRY HANDLES INCOME TAXES
Colorado is one of just 14 states that have a flat income tax structure, meaning the percentage of someone’s income they pay in taxes does not change depending on how much they earn.
That’s according to the Tax Foundation, a Washington, D.C., nonprofit that tracks U.S. tax policies on the federal and state levels.
The foundation says 27 states and the District of Columbia have graduated, or progressive, tax rates, with the highest earners paying more than the lowest earners.
“Currently, six states — Arkansas, Kansas, Massachusetts, Montana, North Dakota, and Ohio — have a two-bracket income tax system,” the foundation wrote in a recent analysis. “At the other end of the spectrum, Hawaii has 12 brackets. Top marginal rates span from 2.5 percent in Arizona and North Dakota to 13.3 percent in California.”
The Taxpayer’s Bill of Rights, which is in Colorado’s constitution, requires that Colorado’s income tax rate be imposed at one rate, barring the state from having a graduated rate.
Eight states, including Wyoming, New Hampshire, Texas and Florida, levy no individual income tax at all, according to the foundation. They make the revenue with higher property and sales taxes.
A CLOSER LOOK AT COLORADO TAXPAYERS
In case you’re wondering how much money Coloradans make, check out the chart below that was put together by nonpartisan legislative staffers.
COLORADO GENERAL ASSEMBLY
Colorado legislature considers an HR upgrade
Leadership at the Colorado Capitol is mulling whether to create a central human resources department for the legislature to better handle workplace issues.
“I would argue that it is not working very well,” House Speaker Julie McCluskie, a Dillon Democrat, told the Executive Committee of Legislative Council this week during discussion of an HR upgrade. “I think we have opportunities to do better by all of the individuals that are represented in the legislative branch with an HR function that is more robust. Actually having a number of dedicated individuals working in a human resources department — whatever the office might be called — I think that could really help us, certainly help the House, in better dealing with situations that have arisen.”
McCluskie, whose tenure as speaker has included tricky situations with fellow Democrats as well as Republicans, requested that nonpartisan staff study how other state legislatures handle human resources and come up with a list of options Colorado could pursue.
Right now, HR duties are split between the different nonpartisan staff agencies and the Office of Legislative Workplace Relations. Since lawmakers are elected and not hired, it can be unclear where to turn when a workplace issue arises.
Of the 45 states nonpartisan legislative staff in Colorado analyzed, 36 have some kind of internal human resources department. Some of those states have HR departments for each chamber of their legislature and staff agencies, while others roll it all into one.
Nonpartisan staffers told Colorado’s legislative leaders they could keep HR functions in the Office of Legislative Legal Services and simply expand them, or move human resources into Legislative Council Staff. They could also create an independent agency to handle Capitol HR.
“The complexity of the legislative work environment is much different than a traditional work environment due to the unique roles that we have here,” Ben FitzSimons, who leads the Office of Legislative Workplace Relations, told the executive committee this week. “Legislators (are) not employees. We have nonpartisan staff who have to do their work in a nonpartisan manner. We have partisan staff who have to do their work in a partisan manner. We have third parties, who are folks like lobbyists and members of the media, and those folks wouldn’t receive full service coverage under central HR. But they are covered by our workplace harassment and workplace expectations policies.”
That complexity, FitzSimons said, lends itself to “greater levels of legal liability as it relates to employment laws.”
Legislative leaders expressed interest in moving to a different HR model at the Capitol, but they balked at the potential costs given the $1.2 billion budget hole lawmakers are contending with this year.
“It feels like there’s some momentum growing here,” McCluskie said as the executive committee put off further discussions on the changes to a later date.
Want to reach Colorado political influencers and support quality local journalism? The Sun can help get your message attention through a sponsorship of The Unaffiliated, the must-read politics and policy newsletter in Colorado. Contact Sylvia Harmon at underwriting@coloradosun.com for more information.
THE POLITICAL TICKER
BUDGET CUTS
The Joint Budget Committee on Thursday agreed to draft eight bills to repeal millions of dollars worth of promised spending as it looks to close the state’s structural deficit.
One would eliminate a program that dates back to the Gov. John Hickenlooper administration: a grant that helps law enforcement target gray and black market marijuana sales. That would save the state about $800,000 next budget year.
Another would scale back a bipartisan bill the legislature passed last year to have the state share the cost of assistant district attorney salaries with county governments starting July 2026. The JBC’s proposal would delay the provision until July 2027, and have the state cover 25% of their pay. That’s down from the 50/50 split called for by Senate Bill 13, but still more than the state contributes today — nothing. The original proposal was aimed at helping rural counties with staffing shortages.
If the legislature approves the change, that won’t help with next year’s budget crunch. But it would save the state $1.1 million annually starting in the 2026-2027 budget.
GUNS
The Senate Judiciary Committee this week postponed its hearing for Senate Bill 3, which would ban the manufacture and limit the sale of certain semiautomatic weapons that use detachable magazines.
It’s unclear when the bill will be heard in the committee.
COLORADO DEMOCRATS
Democratic U.S. Sen. Elizabeth Warren of Massachusetts will headline the Colorado Democratic Party’s annual gala.
The May 31 event will be held at the Denver Center for Performing Arts.
READ MORE
???? = source has article meter or paywall
THIS WEEK’S PODCAST: Colorado’s process of filling legislative vacancies is back in the spotlight
CONGRESS
Catching up with Jason Crow
The Unaffiliated caught up with U.S. Rep. Jason Crow this week ahead of President Donald Trump’s address. Here’s what he said about how things are going in Washington, D.C.
The following has been edited for clarity and length.
The Unaffiliated: We’ve been hearing from a lot of Democratic voters that they want their representatives to be doing more to push back against Trump. How are you responding to those calls?
Jason Crow: My constituents know that I’m a fighter and that I will always go where the fight is. And right now the fight is in Washington and on the streets of Colorado as this president attempts to disassemble our democracy and pull us back from our leadership in the world and take health care away from millions of Americans. I’m going to do everything possible to prevent that from happening. I’ll continue to help lead the resistance, whether that’s flooding the zone with information and going to debate anybody anywhere on media, whether it’s holding town halls and engaging with people around the district, whether it’s pushing hard on the legislative front.
Unaffiliated: Do you get the sense that people who voted for Trump are changing their minds? How do Democrats persuade those people that maybe they made a wrong decision?
Crow: The winds are shifting around the country. I had almost 1,500 people show up to my town hall, which is almost three times the size of my next largest town hall since I’ve been a member of Congress. I know of Republican voters, even Trump voters, that said “you know, we just thought that the president was bluffing, that he really wouldn’t do this stuff.” But he is. He’s doing it. And it’s going to cut deep, and it’s going to hurt people really badly. And that’s not what they signed up for. So I think the key for us is that we have to be willing to keep our arms open and welcome folks back into our tent.
Unaffiliated: What are you hearing from your Republican colleagues in the House?
Crow: Privately, they tell me they’re extremely disappointed, whether it’s on national security or health care. A lot of these cuts on Medicaid and a lot of the things that are in the budget are going to hurt rural communities and red communities the most. They’re starting to hear from their constituents. The problem is these folks are not willing to say it publicly. They’re so afraid of Donald Trump. There’s a huge disconnect between what they say and acknowledge in private versus what they’re willing to do in public.
Unaffiliated: What’s your sense about where America stands on the international stage right now. Are you trying to reassure folks?
Crow: I am trying to reassure folks as much as I can, but I’m not making promises I can’t keep. My entire life, the United States was the leader of the free world. In less than two months, Donald Trump has destroyed a lot of that — our reputation, our standing in the world, our alliances that we rely on for national security. It’s happening with astonishing speed.
THE BIGGER PICTURE
???? = source has article meter or paywall
The Colorado Sun is part of The Trust Project. Read our policies.
Corrections & Clarifications
Notice something wrong? The Colorado Sun has an ethical responsibility to fix all factual errors. Request a correction by emailing corrections@coloradosun.com.
