On November 5, 2013, Coloradans will be asked to vote on Amendment 66, a law that proposes to increase revenue for K-12 education by almost $1 billion by increasing the income tax rate. Amendment 66 is a part of a larger effort to overhaul public education in Colorado. It is related to SB 213, an amendment to the Colorado Public School Finance Act, which will go into effect if Amendment 66 is passed. SB 213 and CPSFA deal with funding individual schools while Amendment 66 determines funding for the state educational system as a whole. Both SB 213 and Amendment 66 ride on voters approving the amendment on November 5.
One notable aspect about this amendment is that Colorado currently has a flat income tax of 4.63%. Amendment 66 will wipe this out and introduced a graduated or progressive income tax. Those making between $0-$75,000 will now pay a 5.0% income tax, while those making $75,000 or above will pay a 5.9% income tax. While some people may not think this is important, it indicates a huge shift in taxation philosophy. Personally, I believe that a flat tax is one of the most equitable and fair ways to tax (if one must tax at all); a progressive tax on the other hand is intrinsically unfair. 
- Here is an overview of this ballot issue: Colorado Tax Increase for Education, Amendment 66 (2013).
- Here is the text of Amendment 66: text/pdf
- Here is the 2013 State Ballot Information Booklet (including arguments for and against, pp. 7-8).
Since I oppose Amendment 66, here I will set forth the reasons why I oppose the ballot measure and some resources that support my decision. I realize I am not presenting both sides of the issue in this post (that would require another post of its own). Instead, I will let the proponents of the law make their own case. However, if you want to research what the advocates of the law have to say, I’d recommend reading over the ballotpedia.org article above and also their website, Colorado Commits to Kids: Yes on 66. Here is why I oppose the measure (in no particular order):
Why I Oppose Amendment 66
- This is not about educational reform; this law is about educational finance reform. What’s the difference? Just because you gather more money and throw it at education does not mean you are actually reforming education and making it better. Yet proponents of the law try to pass this off as educational reform. While money can help reform education, it’s not guaranteed to. In addition, a lot of money has already been spent on education at the K-12 level. Specifically, in 2010-2011 Colorado school districts received over $26 million from the federal government to improve low-functioning schools. However, the school districts wasted it: 35% of it was spent on consultants and the Denver Public Schools spent their portion on hiring new staff (p. 3 this study). With this kind of history of waste and poor allocation of resources, the residents of Colorado would be foolish to give $1 billion to public school districts. (See also this op ed; and this one; for general research that shows that increased spending on education doesn’t necessarily lead to better student performances, see p. 81 in this book under the heading Conclusions About Overall Expenditure Growth.)
- When you compare what Colorado spends per pupil with other surrounding states, and the educational outcomes of this spending, you find that Colorado already spends about $10,000 per student and ranks #11. New Mexico and Wyoming spend more per pupil but rank lower. What does this tell us? That there is no directly proportional relationship between spending per pupil and how well each student actually does. This reinforces the point that dumping more money on education isn’t guaranteed to actually help students. (Source).
- Amendment 66 expands revenues to early childhood education, but there is again no guarantee that this improves educational achievement. In short, the studies on early childhood education bear no definite positive correlation between early childhood education and achievement, school-readiness, skills, and the like (p. 4-5 this study). As this study concluded, “Despite general agreements about these aspects of early childhood education studies, important questions about the wisdom of large-scale investments in early childhood education remain unanswered” (p. 127). In short, before Colorado goes sinking millions of dollars of taxpayer’s money in early childhood education, we need to know more about the effectiveness and wisdom of such programs.
- The change to a progressive income tax sets the mechanisms in place to increase the “progressive” nature and adjust rates going forward, ever shifting the burden more and more toward “the rich.” This includes many small businesses. While it’s 5.0% and 5.9% respectively now, how do we know these rates won’t increase? Indeed, this is likely to happen since the law does not forbid changing in the income tax rate (it is silent on this matter). In addition, Amendment 66 is likely to fail to raise the needed revenues to implement SB 213 and thus additional hikes in tax rates would be needed in the future to make up the shortfall. The other issue here is that historically in the U.S., states that have moved to a progressive income tax have ended up raising the rates on high income-earners over time (e.g., California; which has subsequently led to lower revenues collected in CA and greater debt problems; source). There is no reason to think this won’t also happen in Colorado.
- Why will Amendment 66 likely fail to garner the projected revenue? Colorado has had a flat tax since 1987 (then it was 5.0%; it was subsequently decreased to 4.75% in 1999 and 4.63% in 2000). Not only is this tax implementation intrinsically equitable, reduction in the flat tax rate has brought increasing tax revenue for the state government (p. 9 this study). [This is also seen on the national level: when President Cooliage decreased marginal tax rates in the 1920 on high income earners, revenue increased; the same happened during the Reagan and Bush administrations; this is known as the Laffer Curve in supply-side economics. See this study by Thomas Sowell.] The achilles heel of Amendment 66 is that is assumes that high-income earners who are bearing the brunt of the tax rate increase (and who already pay 60% of all Colorado income taxes) won’t adjust their incomes or tax payments at all (known as dynamic response). Yet this is unlikely as individuals and businesses hit hard will move income out of state or work less. Amendment 66 will result in lower state revenues than under the current flat 4.63% rate (see pp. 7-10 this study).
- The shift to a progressive income tax that unequally burdens high income earners (including many small businesses) with funding education could potentially drive businesses, entrepreneurs, and even residents out of the state. Surrounding states have actually reduced their taxes, making business and living expenses in these states more attractive. This could drive people to invest their money in other states (p. 8 this study; source; source; this has already happened in CA). Conversely, few out-of-state residents will bring their businesses to Colorado if the marginal income tax rates here are higher than surrounding states. To top it off, the business climate in Colorado is already grim: we rank #32 in tax burden and place 18th in tax business climate (p. p. 8 this study; all of this study for 2013 and this updated study for 2014).
- In addition to what was said above in #6, a good argument can be made that the new taxes will burden small businesses and taxpayers, stymieing Colorado’s decent economic growth. (See this analysis and this op ed.).
- Amendment 66 effectively repeals a portion of the 1992 Colorado Taxpayer Bill of Rights (TABOR). TABOR has a provision in it that all new taxes or tax increases require voter approval (see Section 20 of Article X of Colorado’s constitution). Yet the Amendment 66 ballot measure allows that “all tax revenues attributable to this measure to be collected and spent without future voter approval.” In short, this is a dangerous violation of constitutional taxpayer rights and for this reason alone should be rejected. (Op ed; another op ed.)
- The law requires that at least 43% of the state’s total budget be spent on educational services and the school bureaucracy. Not only is this almost half of the state’s budget, but it’s only a floor, meaning, that percentage could go up. This is irresponsible since most other state spending would suffer (law enforcement, health care, parks, universities, etc.) (Source).
- The money raised through the higher taxes will not be equitably distributed by county; meaning, residents in Boulder, Douglas, and Jefferson counties will pay more in taxes than their local school districts will receive in funding. Local residents who pay taxes for educational funding should see that money spent on schools in their district, not on other districts. (Source).
- Amendment 66 is essentially legislation through amendment, not legislation through congressional law. Trying to legislate through amendments is difficult and dangerous. It’s difficult because it needs voter approval to pass (not just a vote in the legislature); it’s dangerous because once it’s in place, it can’t be changed or repealed except for another amendment voted on by the people. Legislating through amendments is very rigid and gives lawmakers little wiggle room for adjustment or repeal if the law turns out to be bad. Amendments to constitutions serve the purpose of drawing boundaries on authority, not for creating and passing specific laws (thus, the 16th Amend. in the U.S. Constitution on income tax is short and sweet; whereas, actual legislation determining income tax rates and provisions is complex and handled at the congressional level).
- The law could allow for the Public Employee Retirement Association (PERA), which is currently underfunded by $20 billion, to be funded by these extra taxes. While proponents of Amendment 66 point out that the law’s language specifically prohibits this, Governor John Hickenlooper has commented that once the money goes to specific districts, it’s hard for the state to keep track of it. This is a tacit admission that the money could be funneled to PERA. The other problem is that PERA is paid for by school districts; while districts can’t legally fund PERA with Amendment 66 money, Amendment 66 funds teacher’s salaries and general needs, which includes PERA, since pension payments are part of teacher salaries. Thus in an indirect way, this money could be used to make PERA and Medicare payments. This will be a great temptation for school districts since PERA is already underfunded and school districts’ budgets are under considerable stress due to PERA demands. (Source; Source; this contrary view).
- The general U.S. economy is relatively weak. Whether we’ve had a “recovery” from the Great Recession of 2008 is debatable. But many people are still trying to recover from the housing boom and bust and its consequences. On top of this, the ACA (Obamacare) is going to be adding a huge financial strain to individuals and businesses. This has already been seen through increased premiums and deductibles, dropped insurance plans, the individual mandate, the employer mandate, and a slew of new taxes related to the ACA (don’t be fooled, government “subsidies” for insurance plans comes from current and future taxation). (Source; Source; Source; for impact on businesses, see this example). With so many new financial burdens being placed on individuals, families, and businesses adding a $1 billion local tax increase is simply unwise, regardless of good intentions.
- Another problem I have with this initiative is the way its proponents present the issue. The very fact that the website promoting Amendment 66 is called “Colorado Commits to Kids” would indicate that those residents who care about education reform, proper finance, and quality of K-12 education should back this bill. Conversely, opponents are cast in a negative light as being against reform, against commitment to children, against caring, against education, etc. This is simply false. This approach to important issues is the characteristic modus operandi by the Progressive Left and Democrats who continually paint all their ideas, initiatives, and reforms as being “progressive.” Yet they usually do more harm than good. Conversely, the opponents of Amendment 66 have called their website “Coloradans for Real Education Reform”; this is implicitly making the claim that they know what real reform looks like and the other side doesn’t, not that backers of Amendment 66 don’t care about children. It’s a policy debate, not an attack on people’s compassion and sensibilities.
- Is Amendment 66 transparent? Since the law is scheduled to take in almost $1 billion in new taxes, we as residents and taxpayers must be absolutely certain that there is sufficient accountability and transparency about who is spending the money and how it is being spent. In addition, if we find the money is not spent properly or is being abused, is there the ability to change the law? Probably not (see #11). Proponents say spending will be documented and transparent. Opponents doubt it. In addition, the website that will supposedly track the money will itself will cost close to $3 million a year (source). Since all of this is a lot of money being handed to and handled by the government (which we should inherently mistrust), we must be absolutely sure before we pass the measure. If there is any doubt, it should be rejected. (Source; Source).
- Whether the amendment is transparent is debatable; but what’s not debatable is that it will be wasteful and it will misallocate funds. Specifically Amendment 66 will fund SB 213 that targets existing programs that are already known for their fraud. This includes the federal free and reduced-price lunch program (FRL), which Amendment 66 will subsidize. Yet subsidies usually produce more of what they are subsidizing (e.g. federal school loan program) and this bears out in the fact that the proportion of Colorado school children that are considered at-risk has risen faster than the the actual amount of children in poverty. Namely, in 1993 the proportion of children in poverty ages 5-17 was 13.9% and this rose to 15.9% in 2011, a 14% increase; yet enrollment in FRL was 22.7% in 1994-95 and this rose to 36% in 2011-12, an almost 59% increase. What does this mean? It means a heck of a lot of children who are not at-risk and who are not poor are using the FRL system. This is because the law provides incentives to take advantage of this and other programs. For more see pp. 1-2 of this study.
- A different kind of objection is to see what individuals, foundations, and organizations are supporting Amendment 66. This list is troubling: New York Major Bloomberg has personally given $1 million; the Bill and Melinda Gates foundation has supported it, and teacher unions have coughed up more than $4 million. The proponent Colorado Commits to Kids has spent nearly $10 million so far, far outspending the opposition (this is why everyone got a “Vote for 66” flyer in their mail this past week) (source; source). While we shouldn’t blindly support or oppose a law simply because of those who have contributed to its success (or failure), we should be wise about who is pulling the financial strings and conducting the show behind the curtain. I know little about the Gates Foundation, so I can’t comment there. Yet Mayor Bloomberg is notorious for corruption, government expansion, control, and coercion, and supporting bad policies (this site chronicles such things). And anyone who is slightly familiar with teacher unions knows the kind of power and leverage they weld – and not always for the good.
- Finally, my last objection is more philosophical. So far in everything I’ve said (and the resources below) I have assumed that the state is indeed responsible for K-12 education. Amendment 66 and SB 213 assume this as well, as do proponents of the measure. But why think this? This was not so for much of our history. Instead, families, communities, and specific institutions – local districts – were responsible for the education of the children who lived in that area. Centralizing education is dangerous for many reasons (at the state and federal level). Not only is government by nature more inefficient, wasteful, hard to keep accountable, and less responsive to immediate needs, but there is the danger of state controlled information and imposed curriculum and values. Whoever controls the money controls what your children are taught. We see this today in the Common Core standards that are already being implemented nationwide. The other problem is that the only way governments can fund education is through taxation – and taxation is the power to bully and the power to destroy. Instead, I would like to see education be paid for as any other commodity by those who need it instead of being subsidized by a vast, abusive bureaucracy. We need to start thinking outside the top-down government-organized educational systems we have today; there are other options.
Opposition – Resources
- Coloradans for Real Education Reform (Facts)
- Amendment 66 and SB 213
- A Billion-Dollars Worth of Bad Ideas: The Amendment 66 Tax Hike Leaves Kids and Teachers Behind, Harms Colorado’s Working Families, Enriches a Broken Bureaucracy (Independent Institute analysis by Linda Gorman; pdf format)
- “Spending on Schools” by Eric Hanuskhek (the book was published by Hoover Press; more resources from the author)
- Amendment 66: Unfair and Overpriced (PDF)
- Amendment 66: Spend More, Get Less
- K-12 School Funding Myths and Facts
- Colorado Amendment 66: A $1 Billion Tax Increase on Small Business and Individual Taxpayers
- Rocky Mountain High Taxes
- Vote ‘no’ on Amendment 66 Tax Increase
- Amendment 66 Would Hurt Small Businesses Across Colorado
- Backers of Colorado Income Tax Hike for Schools Turn in Signatures
- Colorado’s Funding for Public Schools Initiative Hurts Small Businesses and Exacerbates Tax Inequality
- NFIB: Members Oppose Colorado School Tax
- Gov. Hickenlooper Admits: Districts Can Use Amendment 66 Money for PERA
- So, Can Amendment 66 Money Be Used for PERA?
- Colorado’s Amendment 66 Ignites Battle Over PERA Pension
- Amendment 66: Former Colorado senators oppose school finance question
- Amendment 66: Big debate is on guarantees on spending new money
- How Many Millions for Amendment 66 Transparency Promise?
- Colorado Amendment 66: Is it Right for Schools?
- Fact-Checking Amendment 66 Claims
- Rosen: Reasons to nix Amendment 66
- Our View: Vote ‘no’ on Amendment 66
- No on Amendment 66: It’s unfair to Colorado families, students, and teachers
- No on Amendment 66: Reform is about more than dollars
- Carroll: Denver school district crosses line in pushing Amendment 66
- Carroll: Amendment 66 Tax Hike is One Tough Sell
- May: Amendment 66 is Bad for Business
- They Want to Take Away – Your Rights
- Tax Foundation on Amendment 66: “Colorado’s economy…is not invincible.”
- Why this former Democrat state senator cannot support Amendment 66
- Amendment 66 Supporters’ Lesson for Children: How to Mislead with Statistics
- Business, policy groups, come together in opposition to Amendment 66
- A-66 Issue: Colorado’s neighbors are lowering taxes
- Amendment 66 crushed in citizen survey by Denver City Councilwomen
- Irvine: Reading, Writing and Amendment 66
- Rather than Amendment 66, how about some real reform?
- Norman Anderson: No on Amendment 66
- Teacher unions support massive tax hikes, oppose modest reforms in Amendment 66
- Amendment 66 mutilates states constitution, enriches greedy bureaocracy
- Why I’m voting no on Amendment 66
 While this post is not about progressive taxation, or other tax philosophies, I will leave you with these sources: The Inequality of the Progressive Income Tax and Progressive Taxes. I hope to write more on this issue in the future.