March 22, 2011 12:21 AM UTC

Graduated Tax Measures Pulled; Heath's Proposal Loses Sunset

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• by: Colorado Pols

The Colorado Statesman’s Marianne Goodland reports:

Ballot measures on taxes that were headed to the November ballot are being pulled by their sponsors, Sen. Rollie Heath, D-Boulder, and the Colorado Fiscal Policy Institute, but for very different reasons.

Heath told The Colorado Statesman Monday that he’s pulling his citizen initiative that would increase the rates of state income and sales taxes for three years, in favor of a measure that would make the increases permanent.

The Colorado Fiscal Policy Institute decided to pull its ballot measures, six of them in all, because the Institute ran into opposition from chambers of commerce and believed that those groups would raise millions of dollars to defeat whatever showed up on the ballot…

Heath hasn’t yet pulled the first proposal, but said he would do so after he runs it past the Title Board. As to his reason for pulling the proposal, “with the 60 percent requirement I’d be crazy to do a three-year sunset” on it, he said Monday. The 60 percent requirement is contained in a referred measure, Senate Concurrent Resolution 11-001, currently in its final stages in the General Assembly. SCR 1 requires any changes to the constitution pass with at least a 60 percent majority.

The Colorado Fiscal Policy Institute’s proposal for a graduated or “progressive” state income tax, which would (to remedially explain) charge high income earners a higher percentage than lower and middle-income taxpayers, would raise the largest amount of revenue–enough, say proponents, to balance the state budget and start backfilling the last few years of painful cuts. The graduated tax proposal also consistently polled higher than the simpler proposal from Sen. Rollie Heath to raise taxes uniformly across all income brackets.

The problem for COFPI was support: Gov. John Hickenlooper made it clear that he will not support any tax measures during his first year in office, and the major business and commerce associations, from what we’ve been told, very bluntly told proponents that they would raise millions of dollars to fight a graduated income tax. We’re a little surprised at the way that proponents were treated by the business community, who seems to have given COFPI no more respect than they did Doug Bruce–whose “Bad 3” measures were truly destructive.

Our understanding is that business interests are less inclined to fight Sen. Heath’s proposal, as it’s much better for the bottom line of high income earners–but we haven’t heard if they plan to support it, either. Liberals, on the other hand, weren’t very enthusiastic about Heath’s plan because it doesn’t raise as much revenue, and higher sales tax arguably hurts lower income people more than a higher income tax would hurt the wealthy. Now that Heath has removed the “sunset” provision and the more attractive alternative is dead, perhaps that will change.

Because the choice is now to back Sen. Heath, or keep waiting for that elusive “right moment.”

More commentary here.