Colorado Election

Tax Related Issues

We are hopeful everyone will take time to vote in the upcoming election on November 4th.

For Colorado residents, there are a total of 14 statewide initiatives that are on this year's ballot. It is not our role to endorse or suggest how to vote on any of these. However, we want to make sure you are aware of 4 initiatives that have potential impacts on the taxes you pay and/or TABOR in Colorado.

You should have received what is referred to as the Colorado "Blue Book" in the mail. The Blue Book goes into more detail on all 14 initiatives as well as presents arguments for and against each of them. For your convenience, you can use the link below to access the blue book.

Colorado Blue Book

Amendment 87

Graduated Income Tax

Stack of papers with label marginal tax rate.

Colorado currently has a flat rate income tax system (4.4%). In contrast, the IRS has a progressive (graduated) rate rate tax system. A progressive tax rate means that as your income increases, the tax rate you pay also increases.

Amendment 87 seeks to replace the current flat rate system with a progressive rate system similar to the IRS (but with different brackets and rates).

Refer to page 33 of the Blue Book for more details on this amendment and in particular page 34 for the graduated income tax rate table (ranging from 3.7% for income less than $25,000 to 8.4% for income above $1,000,000)

Proposition 136

Income Tax Rate Limit

flat tax concept.Flat Tax is a tax system with a single constant rate applied to all taxable income.

As noted, CO currently has a flat income tax rate of 4.4% which was approved back in 2022. This proposition would create a state law that makes 4.4% the maximum tax rate.

It should be noted this proposition is in direct conflict with Amendment 87.

If both Amendment 87 and Proposition 136 pass, it is unclear how this conflict would be resolved (state legislature, courts, etc.). Logically, it is unlikely this scenario will come to fruition but you never know!

Refer to Page 62 of the Blue Book for more details on this proposition.

Refresher on TABOR

Since the next two initiatives potentially impact TABOR, we thought a quick refresher on TABOR would be helpful.

TABOR stands for the Taxpayer's Bill of Rights and it was approved by Colorado voters in the 1992 election.

TABOR is a legislated mechanism which limits the amount of tax revenue Colorado can retain and spend. In its simplest form, it does this by establishing a spending limit which is essentially a budget based upon prior year spending adjusted for inflation and population growth. Any revenue collected above that limit must be returned to the taxpayers in the form of TABOR refunds.

Although the mechanism to return the excess has taken different forms over the years (TABOR refund checks, temporary income tax rate reduction, adjustments to property tax, etc.), TABOR assures excess revenue collected by the State is returned to CO residents.

Proposition NN

Keep and Spend Money for Education and Other Purposes

Education_ question with group of children in classroom and raise their hands to answer. Learning or support_ diversity and teacher teaching with young students in class of school building together

This proposition increases spending on K-12 education, programs that support children and other purposes.

Although not a direct tax increase, this proposition funds this spending by allowing the State to keep and spend revenue that would otherwise be refunded to taxpayers via the TABOR refund mechanism.

Refer to Page 41 of the Blue Book for more details on this proposition.

Proposition 137

Direct Sporting Goods Sales Tax Revenue for Conservation

Man buying sports equipment using smart phone at the cash register with saleswoman in the shop with travel goods

This proposition would direct a portion of existing sales tax revenue from sporting goods to be used for conservation, wildfire risk mitigation and outdoor recreation programs.

Although not a direct tax increase, this proposition could reduce excess revenue that would otherwise be refunded to taxpayers via the TABOR refund mechanism.

Refer to Page 64 of the Blue Book for more details on this proposition.

TIme to Laugh Comedy Jokes Humor Clock 3d Animation

Much needed tax humor

"Income tax has made more liars out of the American people than golf"

Will Rogers

"The income tax system has created more criminals than any other single act of government"

Senator Barry Goldwater

"Dear IRS, I am writing to you to cancel my subscription. Please remove my name from your mailing list"

Charles Schultz

Balcerzak Financial Services, LLC | 6455 S Yosemite St. Suite 440 | Greenwood Village, CO 80111 US

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