Proposition CC is a Tax Increase

Proposition CC is a tax increase.

“When the state keeps and spends more of your money, it’s a tax increase.” – Tilor Ridge, Colorado Rising Action executive director.

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To understand, let’s first review what Prop. CC actually does.

Under the Taxpayer’s Bill of Rights, or TABOR, state government spending in Colorado is restrained by a revenue cap. It says that if certain tax and fee collections rise faster than the rate of population growth plus inflation, the excess revenue must get sent back to taxpayers in the form of refunds, unless voters give permission for the state to keep the money.

Prop. CC would eliminate that cap at the state level, allowing the state to keep and spend all future excess revenue on transportation, K-12 schools and higher education rather than refunding it to taxpayers. This process is also known as “de-Brucing,” a reference to TABOR co-author and former state lawmaker Douglas Bruce.

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Prop. CC does increase a person’s tax liability over time. And this is what conservatives mean when they say Prop. CC is a tax increase.

Without the revenue cap in place, the state government would be able to spend more of the tax dollars it collects in the future. And — even though taxpayers aren’t technically paying the government more than the current rate — Coloradans would be left with less money in their wallets, because they wouldn’t get any of it back the next time the state surpasses the revenue cap.

In tax policy speak, without those refunds, a person’s overall “tax liability” would go up, because the government would be able to spend more of their dollars, and they would get to spend less of what they earn for themselves.

“I don’t think it’s a semantic question at all,” says Sloan Speck, an associate professor of law at CU who specializes in tax policy. “The number of dollars that are being taken by the state for public purposes is going to increase by the proposition. That’s a tax increase, I think, pretty clearly.”

State tax collections fluctuate with the economy, so there’s no way to say for sure how much money taxpayers would be giving up.

But legislative economic forecasts provide a rough idea, predicting that single tax-filers making between $39,901 and $85,300, would miss out on an estimated $35 to $40 a year in refunds over the next two tax years. Joint filers would lose $70 to $80 a year. (An important note: Refunds owed in 2020 on taxes collected this year would not be affected by the ballot measure.)

Those refunds may seem small, but cumulatively add up. In total, Prop. CC could wipe out between $652 million and $1 billion in refunds in the first two years, according to economic forecasters.

So does that make Prop. CC a tax hike? Arguably so.