Some high-profile tax increase measures were on the Nov. 3 ballot, and according to the Tax Foundation voters were split on whether to increase their state’s tax burdens:
Illinois voters rejected a high graduated rate income tax while Arizonans embraced a large income tax rate increase for high earners, among the many attention-grabbing results from Tuesday’s elections—most of which, admittedly, weren’t about taxes. Coloradans, meanwhile, ratified an income tax cut in a year that many expected voters to instead be weighing in on a substantial income tax increase…
The Colorado tax cut is of particular note:
Colorado was the only state to give the option to lower income taxes, and voters took the state up on that opportunity. Colorado’s Proposition 116 will permanently lower the state income tax rate from 4.63 percent to 4.55 percent, retroactive to January 1, 2020. In fiscal year 2019, actual tax collections exceeded the revenue cap by $428 million, which triggered a Taxpayer’s Bill of Rights (TABOR) refund in the form of a reduced income tax rate of 4.5 percent for tax year 2019.
While reducing the income tax rate to 4.55 percent for tax year 2020 and beyond would put the rate slightly higher than the rate in effect last year, it would give an estimated $203 million in relief in FY 2021 and $154 million in relief in FY 2022, compared to what would have been collected under current law. At a time when so many are facing economic challenges due to the COVID-19 pandemic, this change will provide some relief to individuals, families, and businesses across the state.
Showing, once again, the long-term value of taxpayer bill of rights (TABOR) measures and their ability check the growth and cost of government.
Image Credit: By Jericho [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons