Creating a graduated income tax structure that begins at $150,000 in federal taxable income (income after exemptions and deductions) helps to address inequities in Colorado's current tax system.
It's important to note that, currently, all Colorado income and sales taxpayers are already supporting our schools. However, under our decades-old tax structure, it turns out that, when you combine both state and local taxes in Colorado, the lower your income, the higher percentage of your income you pay in taxes. In part this is the case because middle and lower-income earners tend to spend a much greater proportion of their income on consumption (especially spending on necessities) than do higher income households. This is only common sense: the person who makes 100 times the median wage does not spend 100 times as much on food, clothing or gasoline. (The Purple Book Of Useful Fiscal Facts 2018, Colorado Fiscal Institute)
Marginal tax increments like the one created by this initiative are designed to help offset this inequity by creating higher rates on top earners.
The following chart provides an overview of how the Great Schools, Thriving Communities tax increments fund the Quality Public Education Fund, while making the tax code more fair for hard-working Coloradans.
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