Legislative Council Draft

- 1 - Proposition 121: State Income Tax Rate Reduction

Placed on the ballot by citizen initiative • Passes with a majority vote

Proposition 121 proposes amending the Colorado statutes to: 1  reduce the state income tax rate for individuals and corporations from 2 4.55 percent to 4.40 percent for tax year 2022 and future years. 3 What Your Vote Means 4

A “yes” vote on 5 Proposition 121 reduces 6 the state income tax rate to 4.40 percent 7 for tax year 2022 and future years. 8 A “no” vote on Proposition 121 keeps the state income tax rate unchanged at 4.55 percent.

YES NO

Legislative Council Draft

- 2 - Summary and Analysis for Proposition 121 1 Proposition 121 reduces the state income tax rate from 4.55 percent to 2 4.40 percent for individuals and corporations for tax year 2022 and future years. 3 What is the state’s current income tax rate? 4 Colorado’s permanent income tax applies at a flat rate of 4.55 percent, which 5 means that all taxpayers pay the same tax rate regardless of their taxable 6 income. The income tax applies to the Colorado taxable income of both 7 individual and corporate taxpayers. Colorado taxable income is equal to federal 8 taxable income, adjusted for any state additions and deductions. 9 In some years, existing law temporarily reduces the state income tax rate to 10 4.50 percent in order to pay back a portion of the amount the state collected over 11 its revenue limit, which the state is required to return to taxpayers. The tax rate 12 was reduced to 4.50 percent in 2020 and 2021, and is expected to be reduced to 13 4.50 percent in each of 2022 through 2024, to return money to taxpayers. 14 How does Proposition 121 change state income tax collections? 15 Proposition 121 reduces the state individual and corporate income tax rate to 16 4.40 percent for tax year 2022 and future years. The measure is expected to 17 reduce state income tax collections by $412.6 million in state budget 18 year 2023-24. This amount represents a reduction in expected state General 19 Fund revenue of approximately 2.4 percent. 20 How are state income tax collections spent? 21 State income tax collections are the main source of General Fund revenue. The 22 General Fund is the main source of state revenue available to be allocated by the 23 state legislature to pay for general government operations such as education, 24 human services, and corrections. In state budget year 2020-21, the state income 25 tax generated $10.7 billion, which accounted for 68.4 percent of General Fund 26 revenue. In addition to General Fund revenue, the state budget also includes 27 money from federal funds and other taxes and fees. More information about the 28 state budget can be found at: https://leg.colorado.gov/explorebudget/. 29 How does Proposition 121 affect state spending? 30 The measure’s long-term effect on state spending depends on whether state 31 revenue is above or below the constitutional revenue limit, which is called the 32 Taxpayer’s Bill of Rights (TABOR) limit. Money collected under the limit may be 33 spent or saved, while money collected over the limit must be returned to 34 taxpayers. The money that is returned is called the TABOR refund, and is 35 different from the refund a taxpayer gets when they overpay their income taxes. 36 During years when the state collects money over the TABOR limit, Proposition 37 121 will reduce the amount of money returned to taxpayers and will not change 38 the amount of money available to pay for state operations. During years when 39 the state collects less than the limit, Proposition 121 will reduce the amount of 40 money available for state government operations. The state currently expects to 41 return money collected above the TABOR limit through at least budget year 42 2023-24. 43

Legislative Council Draft

- 3 - How does Proposition 121 affect taxpayers? 1 Table 1 shows the estimated decrease in state income tax owed for individual 2 taxpayers with different levels of Colorado taxable income if the state income tax 3 is reduced to 4.40 percent. Because Colorado taxable income is determined by 4 applying additions and deductions to federal taxable income, the income shown 5 in Table 1 may be less than the total amount of income earned by the taxpayer. 6 In addition to lowering the tax burden, the measure will also reduce the amount 7 of money that is returned to taxpayers in any year that the state collects money 8 above its constitutional revenue limit (TABOR). When this occurs, the taxpayers 9 who would receive less money may be different than those that benefit from a 10 reduced tax burden under Proposition 121. 11 Table 1 12 Estimated Impact of Proposition 121 on Individual Income Taxpayers 13 by Income Category in State Budget Year 2023-24 14 (Showing an Income Tax Rate Decrease from 4.55% to 4.40%) 15 Colorado Taxable Income Category Estimated Number of Taxpayers Total Change in Taxes Owed Average Change in Taxes Owed $14,999 or less 1,198,693 -$4.3 million -$7 $15,000 to $29,999 477,377 -$11.2 million -$23 $30,000 to $39,999 247,465 -$9.1 million -$37 $40,000 to $49,999 197,402 -$9.4 million -$47 $50,000 to $69,999 285,180 -$17.9 million -$63 $70,000 to $99,999 267,148 -$23.7 million -$89 $100,000 to $149,999 227,416 -$29.3 million -$129 $150,000 to $199,999 106,782 -$19.5 million -$182 $200,000 to $249,999 56,750 -$13.4 million -$236 $250,000 to $499,999 89,206 -$32.1 million -$360 $500,000 to $999,999 33,309 -$24.1 million -$725 $1,000,000 or more 29,109 -$188.3 million -$6,647 Total 3,215,835 $382.3 million -$119

For information on those issue committees that support or oppose the measures on the ballot at the November 8, 2022, election, go to the Colorado Secretary of State’s elections center web site hyperlink for ballot and initiative information:

http://www.sos.state.co.us/pubs/elections/Initiatives/InitiativesHome.html

Legislative Council Draft

- 4 - Arguments For Proposition 121 1 1) The state government currently collects more taxes than it uses for the 2 programs it funds, and, in fact, more tax money than it is legally allowed to 3 spend. By permanently lowering the tax rate, Proposition 121 cuts out the 4 inefficiency of sending money to the government that just gets returned, while 5 providing taxpayers with tax relief during future economic downturns. 6 Families and businesses are better off when they can keep more of their own 7 money. 8 2) There is no better time to cut the tax rate. The measure is a modest change 9 that, according to the state’s own forecasts, won’t change the amount of 10 money available for state spending for at least the next three years. The 11 state legislature just approved the largest budget in state history and the 12 budget is only expected to grow, even with the tax decrease under 13 Proposition 121. 14 Arguments Against Proposition 121 15 1) Most of the measure’s benefits will go to a small population of very wealthy 16 taxpayers, including corporations. About 75 percent of taxpayers will receive 17 a tax cut of less than $63 per year. Comparatively, those with incomes over 18 $1 million, representing less than 1 percent of taxpayers, will receive nearly 19 half of the total tax savings from the measure. On average, these taxpayers 20 are expected to save almost $7,000 per year. In addition, corporations 21 outside of Colorado will keep more money, which they may choose to invest 22 elsewhere or pay as profits to out-of-state shareholders. 23 2) High inflation, the ongoing pandemic, and chaotic international relations have 24 elevated the risk of an economic recession. If a recession occurs, the 25 measure will likely reduce the amount of money available for the state 26 budget, making it harder for the state to respond to economic challenges and 27 provide critical services to those most impacted. Now is not the time to 28 weaken the state’s safety net. 29 Fiscal Impact for Proposition 121 30 State revenue. Proposition 121 reduces state General Fund revenue by an 31 estimated $638 million in state budget year 2022-23 and $413 million in state 32 budget year 2023-24. The estimate for budget year 2022-23 represents a 33 full-year impact for tax year 2022 and a half-year impact for tax year 2023, 34 because the measure takes effect after completion of budget year 2021-22. 35 State spending. Implementation of the measure is expected to cost the state 36 about $11,000. Based on state economic forecasts, the measure would not 37 affect the amount of General Fund available for the state to spend or save in 38 budget year 2022-23 or budget year 2023-24. 39 TABOR refunds. The Taxpayer’s Bill of Rights Amendment, or TABOR, limits 40 the amount of revenue that the state may spend and save each year. The 41 revenue limit increases each year to account for inflation and population growth. 42 Revenue the state collects over the limit must be returned to taxpayers. 43 Proposition 121 lowers the state income tax rate, which will reduce the amount to 44 be returned. 45

Legislative Council Draft

- 5 - Taxpayer impacts. All taxpayers will pay 3.3 percent less in state income tax, 1 though the impact in dollar terms will vary by income. On average, individual income 2 taxpayers will pay $93 less in individual income taxes for tax year 2022. In years 3 where a refund is required by the Taxpayer’s Bill of Rights including budget year 4 2022-23, lower income households may experience a net decrease, since the 5 amount returned to them as a result of TABOR may fall by more than the amount 6 they owe in income taxes. 7

2nd Draft

- 1 - Proposition ?: State Income Tax Rate Reduction

Placed on the ballot by citizen initiative • Passes with a majority vote

Proposition ? proposes amending the Colorado statutes to: 1  reduce the state income tax rate for individuals and corporations from 2 4.55 percent to 4.40 percent for tax year 2022 and future years. 3 What Your Vote Means 4

A “yes” vote on 5 Proposition ? reduces the 6 state income tax rate to 4.40 percent for 7 tax year 2022 and future years. 8 A “no” vote on Proposition ? keeps the state income tax rate unchanged at 4.55 percent.

YES NO

2nd Draft

- 2 - Summary and Analysis for Proposition ? 1 Proposition ? reduces the state income tax rate from 4.55 percent to 4.40 percent 2 for individuals and corporations for tax year 2022 and future years. 3 What is the state’s current income tax rate? 4 Colorado’s permanent income tax applies at a flat rate of 4.55 percent, which 5 means that all taxpayers pay the same tax rate regardless of their taxable 6 income. The income tax applies to the Colorado taxable income of both 7 individuals and corporate taxpayers. Colorado taxable income is equal to federal 8 taxable income, adjusted for any state additions and deductions. 9 In some years, the state income tax rate is temporarily reduced to 4.50 percent in 10 order to pay back a portion of the amount the state collected over its revenue 11 limit, which the state is required to return to taxpayers. The tax rate was reduced 12 to 4.50 percent in 2020 and 2021, and is expected to be reduced to 4.50 percent 13 in each of 2022 through 2024, to return money to taxpayers. 14 How does Proposition ? change state income tax collections? 15 Proposition ? reduces the state individual and corporate income tax rate to 16 4.40 percent for tax year 2022 and future years. The measure is expected to 17 reduce state income tax collections by $412.6 million in state budget 18 year 2023-24. This amount represents a reduction in expected state General 19 Fund revenue of approximately 2.4 percent. 20 How are state income tax collections spent? 21 State income tax collections are the main source of General Fund revenue. The 22 General Fund is the main source of state revenue used to pay for general 23 government operations such as education, health care, human services, and 24 corrections. In state budget year 2020-21, the state income tax generated 25 $10.7 billion, which accounted for 68.4 percent of General Fund revenue. In 26 addition to General Fund revenue, the state budget also includes money from 27 federal funds and other taxes and fees. More information about the state budget 28 can be found here: https://leg.colorado.gov/explorebudget/ 29 How does Proposition ? affect state spending? 30 The measure’s effect on state spending depends on whether state revenue is 31 above or below the constitutional revenue limit, which is called the Taxpayer’s Bill 32 of Rights (TABOR) limit. Money collected under the limit may be spent or saved, 33 while money collected over the limit must be returned to taxpayers. The money 34 that is returned is called the TABOR refund, and is different from the refund a 35 taxpayer gets when they overpay their income taxes. During years when the 36 state collects money over this limit, Proposition ? will reduce the amount of 37 money returned to taxpayers and will not change the amount of money available 38 to pay for state operations. During years when the state collects less than the 39 limit, Proposition ? will reduce the amount of money available for state 40 government operations. The state currently expects to return money collected 41 above the limit through at least budget year 2023-24. 42

2nd Draft

- 3 - How does Proposition ? affect taxpayers? 1 Table 1 shows the estimated decrease in state income tax owed for individual 2 taxpayers with different levels of Colorado taxable income if the state income tax 3 is reduced to 4.40 percent. Because Colorado taxable income is determined by 4 applying additions and deductions to federal taxable income, the income shown 5 in Table 1 may be less than the total amount of income earned by the taxpayer. 6 In addition to lowering the tax burden, the measure will also reduce the amount 7 of money that is returned to taxpayers in any year that the state collects money 8 above its constitutional revenue limit. When this occurs, the taxpayers who 9 would receive less money may be different than those that benefit from a 10 reduced tax burden under Proposition ?. 11 Table 1 12 Estimated Impact of Proposition ? on Individual Income Taxpayers 13 by Income Category in State Budget Year 2023-24 14 (Showing an Income Tax Rate Decrease from 4.55% to 4.40%) 15 Colorado Taxable Income Category Estimated Number of Taxpayers Total Change in Taxes Owed Average Change in Taxes Owed $14,999 or less 1,198,693 -$4.3 million -$7 $15,000 to $29,999 477,377 -$11.2 million -$23 $30,000 to $39,999 247,465 -$9.1 million -$37 $40,000 to $49,999 197,402 -$9.4 million -$47 $50,000 to $69,999 285,180 -$17.9 million -$63 $70,000 to $99,999 267,148 -$23.7 million -$89 $100,000 to $149,999 227,416 -$29.3 million -$129 $150,000 to $199,999 106,782 -$19.5 million -$182 $200,000 to $249,999 56,750 -$13.4 million -$236 $250,000 to $499,999 89,206 -$32.1 million -$360 $500,000 to $999,999 33,309 -$24.1 million -$725 $1,000,000 or more 29,109 -$188.3 million -$6,647 Total 3,215,835 $382.3 million -$119

For information on those issue committees that support or oppose the measures on the ballot at the November 8, 2022, election, go to the Colorado Secretary of State’s elections center web site hyperlink for ballot and initiative information:

http://www.sos.state.co.us/pubs/elections/Initiatives/InitiativesHome.html

2nd Draft

- 4 - Arguments For Proposition ? 1 1) Proposition ? permanently lowers the tax burden on families and businesses. 2 The state government currently collects more taxes than it uses for the 3 programs it funds, and, in fact, more tax money than it is legally allowed to 4 spend. Proposition ? ensures that this money remains with families and 5 businesses in the future rather than paying for a larger government 6 bureaucracy. 7 2) Even with the tax decrease under Proposition ?, the state budget is expected 8 to increase in the next budget year, thus resulting in no overall decrease in 9 the state budget in the near future. The measure is a modest change and is 10 not expected to reduce funds available for state operations for at least the 11 next few years. Households that are struggling and foregoing basic 12 purchases need their earnings more than the state government does. 13 Arguments Against Proposition ? 14 1) Most of the measure’s benefits will go to a small population of very wealthy 15 taxpayers, including corporations. About 75 percent of taxpayers will receive 16 a tax cut of less than $63 per year. Comparatively, those with incomes over 17 $1 million, representing less than 1 percent of taxpayers, will receive nearly 18 half of the total tax savings from the measure. On average, these taxpayers 19 are expected to save almost $7,000 per year. In addition, corporations 20 outside of Colorado will keep more money, which they may choose to invest 21 elsewhere or pay as profits to out-of-state shareholders. 22 2) High inflation, the ongoing pandemic, and chaotic international relations have 23 elevated the risk of an economic recession. If a recession occurs, the 24 measure will likely reduce the amount of money available for the state 25 budget, making it harder for the state to respond to economic challenges and 26 provide critical services to those most impacted. Now is not the time to 27 weaken the state’s safety net. 28 Fiscal Impact for Proposition ? 29 State revenue. Proposition ? reduces state General Fund revenue by an 30 estimated $638 million in state budget year 2022-23 and $413 million in state 31 budget year 2022-23. The estimate for budget year 2022-23 represents a 32 full-year impact for tax year 2022 and a half-year impact for tax year 2023, 33 because the measure takes effect after completion of budget year 2021-22. 34 State spending. Implementation of the measure is expected to cost the state 35 about $11,000. Based on state economic forecasts, the measure would not 36 affect the amount of General Fund available for the state to spend or save in 37 state budget year 2022-23. 38 TABOR. The Taxpayer’s Bill of Rights Amendment, or TABOR, limits the 39 amount of revenue that the state may spend and save each year. The revenue 40 limit increases each year to account for inflation and population growth. 41 Revenue the state collects over the limit must be returned to taxpayers. 42 Lowering the state income tax rate will reduce the amount returned. 43

2nd Draft

- 5 - Taxpayer impacts. All taxpayers will pay 3.3 percent less in state income tax, 1 though the impact in dollar terms will vary by income. On average, individual 2 income taxpayers will pay $93 less in individual income taxes for tax year 2022. 3 In years where a refund is required by the Taxpayer’s Bill of Rights (TABOR), 4 which include budget year 2022-23, lower income households may experience a 5 net decrease, since the amount returned to them as a result of TABOR may fall 6 by more than the amount they owe in income taxes. 7

Last Draft Comments from Interested Parties

B 1 B

Proposition 121 State Income Tax Reduction

Ben Murrey, representing Colorado Independence Institute:

Starting on page 2, line 10, the current draft reads—

In some years, the state income tax rate is temporarily reduced to 4.50 percent in order to pay back a portion of the amount the state collected over its revenue limit, which the state is required to return to taxpayers. The tax rate was reduced to 4.50 percent in 2020 and 2021, and is expected to be reduced to 4.50 percent in each of 2022 through 2024, to return money to taxpayers.  I have no problem with this being added for context, but I think it’s important to note that this change is at the legislature’s discretion. In general, LCS could provide more relevant details to the paragraph simply by avoiding passive voice. For example, rather than saying, “…the state income tax rate is temporarily reduced…,” say “the legislature temporarily reduced the income tax rate.” If done well, changing to active voice would both provide more information to readers and allow LCS to reduce the total word count, as in my suggestion below.

 Suggested Language: “When state revenue exceeds the TABOR limit, the state constitution requires the legislature to refund the surplus dollars to taxpayers. The legislature chose to issue a portion of the TABOR refund through a tax rate reduction to 4.50 percent in 2020 and 2021. It may use this and/or other methods to administer any future refunds.”

Starting on page 2, line 19, the current draft reads—

This amount represents a reduction in expected state General Fund revenue of approximately 2.4 percent.

 As I noted in my comments on the 1st draft, it’s misleading to voters to talk about General Funds only. LCS and policy wonks know that GF revenue is the smallest of the state’s three major revenue streams: GF, cash funds, federal funds. To a voter, however, leaving out this context is misleading via omission.

 Suggested Language: “This amount represents a reduction in expected state General Fund revenue of approximately 2.4 percent and a reduction of approximately XX percent of total state revenue.”

Starting on page 2, line 22, the current draft reads—

State income tax collections are the main source of General Fund revenue. The General Fund is the main source of state revenue used to pay for general government operations such as education, health care, human services, and corrections. In state budget year 2020-21, the state income tax generated $10.7 billion, which accounted for 68.4 percent of General Fund revenue. In addition to General Fund revenue, the state budget also includes money from federal funds and other taxes and fees. More information about the state budget can be found here: https://leg.colorado.gov/explorebudget/

Last Draft Comments from Interested Parties

B 2 B Ben Murrey, representing Colorado Independence Institute (Cont.):

 I appreciate that LCS took some of my comments on the 1st draft under consideration here. That’s reflected in the addition of the sentence regarding other state revenue sources. With the change, however, this paragraph continues to obscure the true impact of a 0.15% reduction in income tax. The current draft still conveys the falsehood that GF revenues are the main source of state revenue.

Starting on page 2, line 22, the current draft reads—

State income tax collections are the main source of General Fund revenue.

 As I noted in my comments on the 1st draft, this is true but misleading via omission. State income tax collections are the main source of General Fund revenue, but nowhere near the main source of state revenue. This wording makes the impact of this income tax rate reduction appear larger than it is to anyone who does not have a thorough understanding of how the state generates revenue. According to LCS’s own data, the General Fund made up only a quarter (24.9%) of state revenue in FY2020-21. That compares with 31.3% from Cash Funds and 43.8% from Federal Funds.

 Suggested language: “State income tax collections are the main source of General Fund revenue, which accounts for less than a quarter of all state revenue.”

Starting on page 2, line 11, the current draft reads—

The General Fund is the primary resource for financing state government operations, including education, health care, human services, and corrections.

 The 1st draft said: “The General Fund is the main source of state revenue used to pay for general government operations such as education, health care, human services, and corrections.” In response to my comments on the first draft, LCS appears to have changed “source” to “resource” and “revenue” to “financing.” These are merely semantic differences and did not change the facts of what I commented regarding the 1st draft—that the statement is patently false. The General Fund was the smallest of the three main sources of state revenue (or “resources for financing state government operations”). It appears that—rather than objectively providing useful and accurate information to voters—LCS is bending over backwards to distort voters’ perceptions and make the impact of this small tax rate reduction appear larger than it is.

 As I commented on the first draft, this sentence still falsely implies that the state relies mostly or exclusively on General Fund revenue to finance education, health care, human services, and corrections in the state when, in fact, state revenue from Cash Funds and Federal Funds contribute a significant portion of the financing of these state activities.

 Suggested language: “The General Fund is the smallest of the three main revenues sources for financing state government operations such as education, health care, human services, and corrections.”

Starting on page 2, line 13, the current draft reads—

Last Draft Comments from Interested Parties

B 3 B

Ben Murrey, representing Colorado Independence Institute (Cont.):

In state budget year 2020-21, the state income tax generated $10.7 billion, which accounted for 74.5 percent of General Fund revenue.

 I’m disappointed that LCS did not take my comment on this sentence into consideration. The intent of the Blue Book is to inform voters and provide accurate and useful context for the measures on their ballot. Like the two sentences before it, this sentence distorts the context of the measure by cherry picking data and omitting other relevant information. A voter who is not already an expert on the state budget, looking to the Blue Book for objective context to inform their vote, would likely conclude from this that three-quarters of state revenue would take a hit if this measure were adopted.

 Suggested language: “In state budget year 2020-21, the state income tax generated $10.7 billion, which accounted for 74.5 percent of General Fund revenue, or 18.6 percent of all state revenue.”

Starting on page 2, line 26, the current draft reads—

In addition to General Fund revenue, the state budget also includes money from federal funds and other taxes and fees. More information about the state budget can be found here: https://leg.colorado.gov/explorebudget/

 I appreciate the addition of this context to address my comments on the previous draft. Together with my other suggested changes for this paragraph, voters will have sufficient context to understand how income tax collections are spent as a part of the whole of state spending. With this addition alone, however, it appears that LCS is continuing to engineer a particular perception from voters by providing certain details in the text that might put the measure in a bad light, while delegating the full context to a link.

Starting on page 2, line 30, the current draft reads—

How does Proposition ? affect state spending? The measure’s effect on state spending depends on whether state revenue is above or below the constitutional revenue limit, which is called the Taxpayer’s Bill of Rights (TABOR) limit. Money collected under the limit may be spent or saved, while money collected over the limit must be returned to taxpayers. The money that is returned is called the TABOR refund, and is different from the refund a taxpayer gets when they overpay their income taxes. During years when the state collects money over this limit, Proposition ? will reduce the amount of money returned to taxpayers and will not change the amount of money available to pay for state operations. During years when the state collects less than the limit, Proposition ? will reduce the amount of money available for state government operations. The state currently expects to return money collected above the limit through at least budget year 2023-24.

 I appreciate the inclusion of this section in response to some of my comments from the 1st draft. As written, however, it provides an overly verbose and complicated explanation, rendering it of little use to voters. If LCS wants a reader to read and absorb the information they present,

Last Draft Comments from Interested Parties

B 4 B Ben Murrey, representing Colorado Independence Institute (Cont.):

making the most important points up front and using clear concise language is key. If LCS is committed to keeping this language as is, however, they could add tremendous clarity by answering the question in clear simple terms at the beginning of the paragraph before going into a more detailed explanation. As is, the paragraph never directly answers the question. A voter looking for a clear answer to a simple question would not find it here. I provide it below as a suggested addition.

 Suggested language: Add to the beginning of the paragraph, “Based on current state estimates, the measure would not impact the state budget for at least the first three budget years that it is in effect.”

Under Arguments For Proposition ?

Starting on page 4, line 2, the current draft reads—

Proposition ? permanently lowers the tax burden on families and businesses. The state government currently collects more taxes than it uses for the programs it funds, and, in fact, more tax money than it is legally allowed to spend. Proposition ? ensures that this money remains with families and businesses in the future rather than paying for a larger government bureaucracy.

 This is the first argument voters will see from the proponents. It should be the most compelling argument and end with an impactful statement. This does not do that. The last sentence in particular reads like a strawman argument inserted into the proponent statement by the opposition. My suggestion incorporates LCS’s changes from the 2nd draft but strengthens the argument.

 The second sentence repeats the second proponent point. Let’s stick to one argument per point and make each the strongest it can be. The argument in the first point is that a tax cut would help struggling Coloradans. The argument in the second is that the state can afford a small income tax rate reduction.

 Suggested language: “At a time when historic inflation has made it increasingly difficult for families and small businesses to make ends meet, Proposition ? puts more money in Coloradans’ pockets by providing all taxpayers with an equal income tax rate cut. Particularly during difficult times, individuals, families, and small businesses do better when they can keep a little more of their own money rather than giving those dollars away to politicians and bureaucrats to spend for them.”

Starting on page 4, line 8, the current draft reads—

Even with the tax decrease under Proposition ?, the state budget is expected to increase in the next budget year, thus resulting in no overall decrease in the state budget in the near future. The measure is a modest change and is not expected to reduce funds available for state operations for at least the next few years. Households that are struggling and foregoing basic purchases need their earnings more than the state government does.

Last Draft Comments from Interested Parties

B 5 B Ben Murrey, representing Colorado Independence Institute (Cont.):

 The first two sentence make the argument well, but they’re simply not as compelling as the language I suggested in my comments on the 1st draft. Again, that last sentence sounds like a stale proponent argument inserted by the opposition. My suggested language below combines the strongest arguments from the LCS 2nd draft with some compelling facts. It also eliminates the final sentence included in the 2nd draft.

 Suggested language: “Over the last 20 years, the state budget has nearly tripled, increasing every year with two exceptions. This year the legislature passed the largest budget in state history. Even with the tax decrease under Proposition ?, the state budget is expected to increase in the next budget year, thus resulting in no overall decrease in the state budget in the near future. The measure is a modest change and is not expected to reduce funds available for state operations for at least the next few years. The state has sufficient funds to finance its operations. Many households that are struggling and foregoing basic purchases do not.”

Penn Pififfner, representing himself:

Louis, I was disappointed to find that you have disregarded the issue of proportionality. Your readers want tax policy to be fair. You focused heavily on the benefits to the wealthy, as if lowering a flat rate must be seen as disproportionate. It also is the main thrust of the proponents’ synopsis. Where is your intellectual argument to balance honestly the view that citizens with low incomes and those with high incomes will benefit proportionately? People will want to weigh that consideration as part of the fairness argument, but you so far have excluded it. Penn Pfiffner

Proposition 121 State Income Tax Rate Reduction Contact List Interested Party Organization Name Email Address yuraochrimenko1@gmail.com Josh Abram Self joshabram@msn.com Cathy Alderman Colorado Coalition for the Homeless calderman@coloradocoalition.org Geoffrey Alexander OSPB geoff.alexander@state.co.us William Alsdorf Brighton Elks Home Inc brightonelks1586@gmail.com Kevin Amirehsani Colorado OSPB kevin.amirehsani@state.co.us Natasha Berwick New Era Colorado natasha@neweracolorado.org Matt Bishop Legislative Council Staff matt.bishop@state.co.us Carla Blanc cablanc@mix.wvu.edu Jennifer Brundin Colorado Public Radio jbrundin@cpr.org Steven Byers CSI steven@csinstituteco.org Alex Carlson Colorado Governor's Office alex.carlson@state.co.us Mary Lou Chapman Rocky Mountain Food Industry Association rmfoodindustry@gmail.com James Coleman Office of Sen. James Coleman colemanforcolorado@gmail.com Nick Coltrain Denver Post ncoltrain@denverpost.com Leslie Colwell leslie@coloradokids.org Matt Cook Colorado Association of School Boards mcook@casb.org Bryce Cooke Governor's Office bryce.cooke@state.co.us Kyra deGruy Kennedy Young Invincibles kyra.degruy@younginvincibles.org Dominic DelPapa iQu Strategies ddp@iqustrategies.com Brenda Dickhoner brenda@readycolo.org Debby Dover Self cogirl5419@gmail.com Amber Egbert amber.egbert@state.co.us Cathy Eslinger Cathy.eslinger@state.co.us catherinedeslinger@gmail.com Michael Fields CO Rising State Action mikefields22@yahoo.com Dawn Fritz Colorado PTA dawnfritz@copta.org Erik Gamm Common Sense Institute erik@csinstituteco.org Sam Gilchrist NRDC sgilchrist@nrdc.org Joan Andrew Green Turner J. Andrew Green & Assoc., Inc. joangreen@me.com Micki Hackenberger Husch Blackwell Strategies mickih@hbstrategies.us Allison Hiltz AARP Colorado ahiltz@aarp.org Megan Ives Colorado Children's Campaign megan@coloradokids.org Josette Jaramillo CO AFLCIO jjaramillo@coaflcio.org Paul Kennedy Jessie MArtinez DAV Chapter 50 pkennedy746@gmail.com Cathy Kipp Colorado House of Representatives cathy.kipp.house@state.co.us Riley Kitts riley@coloradokids.org Andrea Kuwik kuwik@bellpolicy.org Pierce Lively Office of Legislative Legal Services pierce.lively@state.co.us Becky Long Siegel Long Public Affairs Becky@slpublicaffairs.com

Proposition 121 State Income Tax Rate Reduction Contact List (Cont.) Interested Party Organization Name Email Address Linda Longenecker City of Grand Junction lindal@gjcity.org Meghan Lopez KMGH meghan.lopez@thedenverchannel.com John Magnino Colorado Secretary of State's Office john.magnino@coloradosos.gov Joshua Mantell The Bell Policy Center mantell@bellpolicy.org Shawn Martini Colorado Farm Bureau shawn@coloradofb.org Rich Mauro DRCOG rmauro@drcog.org Kayla McCarnes kmdenver@msn.com Julia McCorvey Colorado Children's Campaign julia@coloradokids.org Mike McGinnis Fraternal Order of Eagles mike_mcginnis@outlook.com Allison McGrath alli.m.mcgrath@gmail.com N. Menten self on some issues (also a board director for the Taxpayer's Bill of Rights Foundation) coloradoengaged@gmail.com Erin Miller Colorado Children's Campaign Erin@coloradokids.org Tia Mills Gunnison Watershed School District tmills@gunnisonschools.net Dylan Mitchell Michael Best Strategies dsmitchell@michaelbeststrategies.com Meredith Moon OSPB meredith.moon@state.co.us Arianna Morales New Era Colorado Foundation arianna@neweracolorado.org Nellie Moran Colorado State Senate nellie.moran.senate@gmail.com Natalie Mullis natalie.mullis@state.co.us natmullis@gmail.com Hunter Nelson Colorado Children's Campaign hunter@coloradokids.org Cindy Newsome CORE Electric Cooperative cnewsome@core.coop Jennifer Okes okes_j@cde.state.co.us Lynn Padgett Ouray County (Local Government) lpadgett@ouraycountyco.gov Catherine Peterson kittyp@frii.com Penn Pfiffner TABOR Foundation constecon@hotmail.com Andrew Quarm RNDC andrew.quarm@rndc-usa.com Hanni Raley The Arc of Aurora hraley@thearcofaurora.org Erin Reynolds erin.reynolds@state.co.us Christopher Richardson Elbert County chris.richardson@elbertcounty-co.gov Corrine Rivera Fowler The Ballot Initiative Strategy Center corrine@ballot.org Morgan Royal New Era Colorado Foundation morgan@neweracolorado.org Julia Scanlan Aponte & Busam Public Affairs jscanlan@aponte-busam.com Robert Sheesley Colorado Municipal League rsheesley@cml.org Cathy Shull Pro 15 cathy@pro15.org Christian Smith Young Invincibles christian.smith@younginvincibles.org Holly Stanley Colorado Mesa University hestanley@mavs.coloradomesa.edu Sarah Staron Young Invincibles sarah.staron@younginvincibles.org Mollie Steinemann Colorado Restaurant Association msteinemann@corestaurant.org - 2 -

Proposition 121 State Income Tax Rate Reduction Contact List (Cont.) Interested Party Organization Name Email Address Mayra Valdez Siegel Long Public Affairs mayra@slpublicaffairs.com Cameron Vigil Young Invincibles Cameron.Vigil@younginvincibles.org Elliot Williams elliot@siegelpa.com - 3 -

1

Proposition 121 State Income Tax Rate Reduction

Ballot Title: 1

Shall there be a change to the Colorado Revised Statutes reducing the state income tax rate from 2 4.55% to 4.40%? 3

Text of Measure: 4

Be it enacted by the People of the State of Colorado: 5

SECTION 1. In Colorado Revised Statutes, 39-22-104, amend (1.7) as follows: 6

39-22-104. Income tax imposed on individuals, estates, and trusts - single rate - legislative 7 declaration - definitions - repeal. 8

(1.7) (a) Except as otherwise provided in section 39-22-627, subject to subsection (2) of this 9 section, with respect to taxable years commencing on or after January 1, 2000, but before January 10 1, 2020, a tax of four and sixty-three one-hundredths percent is imposed on the federal taxable 11 income, as determined pursuant to section 63 of the internal revenue code, of every individual, 12 estate, and trust. 13

(b) Except as otherwise provided in section 39-22-627, subject to subsection (2) of this section, 14 with respect to taxable years commencing on or after January 1, 2020, BUT BEFORE JANUARY 1, 15 2022, a tax of four and fifty-five one-hundredths percent is imposed on the federal taxable income, 16 as determined pursuant to section 63 of the internal revenue code, of every individual, estate, and 17 trust. 18

(c) EXCEPT AS OTHERWISE PROVIDED IN SECTION 39-22-627, SUBJECT TO SUBSECTION (2) OF THIS 19 SECTION, WITH RESPECT TO TAXABLE YEARS COMMENCING ON OR AFTER JANUARY 1, 2022, A TAX OF 20 FOUR AND FORTY ONE-HUNDREDTHS PERCENT IS IMPOSED ON THE FEDERAL TAXABLE INCOME, AS 21 DETERMINED PURSUANT TO SECTION 63 OF THE INTERNAL REVENUE CODE, OF EVERY INDIVIDUAL, 22 ESTATE, AND TRUST. 23

SECTION 2. In Colorado Revised Statutes, 39-22-301, amend (I)(d)(I)(J) and add (1)(d)(I)(K) as 24 follows: 25

39-22-301. Corporate tax imposed. (1) (d) (I) A tax is imposed upon each domestic C 26 corporation and foreign C corporation doing business in Colorado annually in an amount of the 27 net income of such C corporation during the year derived from sources within Colorado as set 28 forth in the following schedule of rates: 29

(I) Except as otherwise provided in section 39-22-627, for income tax years commencing on or 30 after January 1, 2000, but before January 1, 2020, four and sixty-three one-hundredths percent 31 of the Colorado net income; 32

2

(J) Except as otherwise provided in section 39-22-627, for income tax years commencing on or 1 after January 1, 2020, BUT BEFORE JANUARY 1, 2022, four and fifty-five one-hundredths percent of 2 the Colorado net income. 3

(K) EXCEPT AS OTHERWISE PROVIDED IN SECTION 39-22-627, FOR INCOME TAX YEARS COMMENCING 4 ON OR AFTER JANUARY 1, 2022, FOUR AND FORTY ONE-HUNDREDTHS PERCENT OF THE COLORADO 5 NET INCOME. 6

SECTION 3. Effective date. THIS ACT SHALL TAKE EFFECT UPON PROCLAMATION BY THE GOVERNOR. 7