Opponents Of Colorado Ballot Initiative Distort Study To Claim Tax Increases Will Kill Jobs

Our guest blogger is Alyssa Roberts, a former intern with the Center for American Progress Action Fund and a student at Claremont McKenna College.

Opponents of Colorado’s Proposition 103, a ballot initiative that would restore the state’s income and sales tax rates to where they were in 1999 in order to fund education, claim that the tax increase, if approved, would kill “119,000 jobs over the next five years.” Compare that number to the state’s current unemployment rolls — about 227,000 people, total — and its sounds like Proposition 103 would grow the number of out-of-work Coloradans by 50 percent.

How could increasing the income tax rate from 4.63 percent to 5 percent and the sales tax rate from 2.9 percent to 3 percent for five years have such as devastating impact on employment? It wouldn’t. The organization fighting the proposal, which calls itself Save Colorado Jobs, bases its alarmist claim off a study by economist Eric Fruits. His study didn’t actually predict any job loss if Proposition 103 passes. Fruits even admitted that the anti-103 group distorted his findings.

“It’s not quite correct to call it a job loss,” Fruits told The Colorado Statesman. “It is a difference in employment levels.”

Save Colorado Jobs got the shocking 119,000 job-killing statistic by adding together the projected decline in job growth for each year the tax increase is in effect. But a cumulative number doesn’t make any sense. After all, you wouldn’t add together the number of employed people in the state over five years, which would be about 14 million (when Colorado’s population is only 5 million), to arrive at a job creation number.

And that’s not the only dubious claim against Proposition 103. Again citing Fruits’ study, Save Colorado Jobs says that the tax increase “chases away $218 million in taxable income.” That would only happen if the tax increase lowers the state’s net population growth by 3,610 people each year and the average income of new residents drops by $181, as Fruits’ study predicts.

But his analysis rests heavily on the assertion that people move because of higher taxes, which is actually very rare. When wealthy retirees decide to move, it’s more likely to be because of the weather than the tax rate. And a poorly funded education system discourages potential residents from moving to a state.

Colorado spends $1,809 less than the national average per pupil on K-12 education, ranking it 40th in the nation. The state’s public education budget suffered $500 million in cuts over the last three years, which forced districts to lay off teachers and even reduce graduation requirements to save money. Proposition 103 won’t fix Colorado’s long-term economic problems, but it would temporarily spare schools from further cuts.