I’m a couple of weeks late to this one, but a reader pinged me and asked where I stand on the Denver Gazette story about scrapping Colorado’s flat tax and the revised estimate that pegs the hike at roughly $4.1 billion. Short answer: I hate it. Longer answer below.
Colorado’s left has a new hobby. Say “the rich” three times into a campaign camera and hope voters don’t notice the other hand reaching for everyone’s wallet. The push to kill the flat tax is not bold reform. It is the same tired class warfare that Democrats dust off whenever the budget pants feel tight. They do not have a revenue problem. They have a spending problem with a sugar addiction.
The sales pitch is wonderfully simple. “We will cut taxes for most families and finally make the wealthy pay their share.” That sounds righteous until you meet the fine print. A progressive rate structure is a permanent money machine for politicians who cannot stop promising new programs. Once the brackets are carved into law, the promises grow to match the dollars, then grow some more. When the economy hiccups, the bills do not shrink. The solution, conveniently, is always the next hike. Wash. Rinse. Poorer.
I can already hear the consultants. “Relax. Only the top slice pays more.” Cute. Colorado is stuffed with pass-through businesses where income lives on personal returns. That means the orthodontist who finally hires a third hygienist. The HVAC shop adding a second truck. The immigrant-owned restaurant opening a second location. These are not yacht people. These are payroll people. Hammer them with higher brackets and you starve the capital they use to grow. You do not tax Scrooge McDuck’s coin vault. You tax the next raise for the dishwasher and the next apprenticeship in the trades.
Bracket creep is the quiet thief in this heist. Year one is always marketed as “don’t worry, you’re safe.” Then wages rise, inflation drifts, and households slide into higher brackets even if their buying power does not improve. Indexation rules that sound technical decide whether this becomes a slow-motion tax increase. Spoiler. The rules will be “flexible” when the legislature needs cash, which is always.
Supporters promise miracles for schools and health care. Of course they do. There is always a “crisis” that can be solved if you sign the check. The number tossed around to justify the overhaul conveniently swells to match the ask. Education is vital. Medicaid matters. But throwing a new rate structure at decades of management failures is like pouring bourbon on a kitchen fire and calling it hydration. If this were about outcomes, they would publish hard sunsets and independent audits in plain English, then dare the bureaucracy to earn renewal. They will not. They want an open bar, not a fitness plan.
TABOR still exists. Which means they cannot simply vote themselves higher rates forever without asking you. That is why they need a bigger base now. Lock in the money. Spend like the hangover will never come. When it does, they will frame your TABOR refund as an immoral luxury that only “the rich” care about. The rich, by the way, includes your neighbor who sold a small company after twenty years of risk and wants to retire in Grand Junction instead of Phoenix.
Competitiveness is not a bumper sticker. It is the spreadsheet an employer uses before hiring a senior engineer or opening a new line. We are already an expensive state. Housing is ugly. Fees are everywhere. Now the bright idea is to add a complex, volatile income-tax scheme on top because it polls well to punch someone who owns a nicer house than you. Brilliant strategy if your goal is to export investment to Wyoming and Utah. Terrible strategy if your goal is a thriving middle class that can afford groceries and still save for a weekend in Estes.
I keep hearing the moral case. “But billionaires.” Here’s mine. The state should stop treating taxpayers like an ATM with feelings. If lawmakers believe K-12 needs an infusion for a measurable fix, refer a tight, temporary levy with a real lockbox and a hard stop. If health programs are blowing through forecasts, show the drivers line by line, clean procurement, and stop pretending every grant is sacred. Coloradans are generous when you respect them. They turn hostile when you treat them like marks in a shell game.
Let’s talk politics for a second. This campaign is not about making Colorado fair. It is about making Colorado government bigger and harder to reform. The new brackets come with strings that tie you to a permanent wish list. The ads will show a teacher buying crayons and a nurse giving shots. The statute will fund a lot more than crayons and shots. Once locked in, you will hear a new refrain. “We are still underfunded compared to national averages.” Translation. That four billion was a down payment.
The truth is not complicated. A flat tax with a low rate and transparent credits is easy to understand and hard to game. A progressive maze invites carve-outs for the well connected and sticks the ambitious dentist with the tab. It shouts virtue while delivering a slower economy and a faster exodus of top earners. You might enjoy the schadenfreude for a season. Then your kid graduates and the best offer is two states away. Enjoy the principle when the moving truck pulls up.
If this were a genuine fix, the sponsors would lead with restraint. First, cut waste. Then, sunset what cannot prove results. After that, if you still need targeted revenue, ask voters for a narrow, time-boxed measure with automatic off-ramps when forecasts miss. Instead we get a parade with torches for “the rich” and a bill that lands on everyone when growth stalls.
So no, I am not buying the fairness mask. This is a cash grab dressed as justice. It punishes the people who build things and pretends the rest of us will never feel the draft. We will. We always do. Colorado should reject the envy economy and force its politicians to live inside a budget like the rest of us. You do not fix a spending addiction with a bigger line of credit. You fix it with discipline and humility. Until the left can demonstrate both, the only responsible answer is no.
