The poor and middle class shoulder most of Colorado's tax burden, a new report shows.
Conducted by the Institute on Taxation and Economic Policy, the study shows that the poor in Colorado pay an 8.9 percent tax rate, while the richest 1 percent pay at a rate about half that — 4.6 percent.
The middle class do only slightly better than the poor, paying at a rate of 8.3 percent.
New Study Shows Poor and Middle-Income Colorado Families Pay More of their Earnings in Taxes than the Rich
DENVER — Colorado takes a much larger share from middle- and low-income families than from wealthy families, according to the fourth edition of “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” released today by the Institute on Taxation and Economic Policy (ITEP). The study is attached.
Combining all of the state and local income, property, sales and excise taxes Colorado residents pay, the average overall effective tax rates by income group are:
Bottom 20 percent in income: 8.9 percent tax rate in Colorado, 11.1 percent nationally
Middle 20 percent in income: 8.3 percent tax rate in Colorado, 9.4 percent nationally
Top one percent in income: 4.6 percent tax rate in Colorado, 5.6 percent nationally
“Asking the poorest Coloradans to pay more of their income in taxes than the richest, those making half a million dollars or more, violates our sense of fairness,” said Ali Mickelson, Tax Policy Attorney at Colorado Fiscal Institute. “Colorado needs to change the tax structure so that the richest among us are taking on their fair share of tax responsibility.”
Having low taxes does not guarantee fair taxes. Colorado ranks 5th lowest in state and local taxes per $1000 of income yet low income taxpayers pay almost twice as much of their earning in taxes as rich taxpayers do.
“When you hear people brag about their low tax state, you have to ask them, low tax for who?" said Matthew Gardner, Executive Director of ITEP and an author of the study.
It is often the structure of taxes that result in the inequity. The data in Who Pays?” also demonstrates that states commended as “low tax” are often high tax states for low- and middle- income families because they have no income tax or use flat income tax rate across all income groups. Colorado income tax uses a flat rate structure for all income levels.
“The fourth edition of “Who Pays?” measures the state and local taxes paid by different income groups in 2013 (at 2010 income levels including the impact of tax changes enacted through January 2, 2013) as shares of income for every state and the District of Columbia. The report is available online at www.whopays.org.
Colorado Fiscal Institute is a 501(c)(3) nonprofit, nonpartisan organization that provides credible, independent and accessible information and analysis of fiscal and economic issues facing Colorado in order to inform policy debates and sound decisions that improve the well-being of individuals, communities and the state. http://www.coloradofiscal.org
The Institute on Taxation and Economic Policy is a 501(c)(3) non-profit, non-partisan research organization that works on federal, state, and local tax policy issues to ensure that elected officials, the media, and the general public have access to accurate, timely, and straightforward information that allows them to understand the effects of current and proposed tax policies. www.itep.org.
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