Proposition 103 supports education while protecting economic growth
Proposition 103 on November's ballot will raise about $500 million annually for education over the next five years. It does this by increasing Colorado's income tax rate from 4.63% to 5% and the state sales tax rate from 2.9% to 3%. These are the rates that existed throughout the 1990s – a period of strong economic growth in Colorado.
These revenues will be used to counteract deep cuts to education spending enacted in recent years and to help protect against further cuts.
Opponents have argued that the increases in tax rates will slow economic growth, resulting in slower job growth than is currently projected.
A thorough review of the research on economic development shows that while taxes matter, other factors, including the cost and quality of labor, quality of public services, proximity to markets and access to suppliers, are more important. Over the long term, investments in education that result in a better-educated and higher-skilled workforce will make Colorado more attractive to businesses and help drive our economic growth.
Economic analyses show that while tax increases are likely to slow job growth, increases in state spending tend to increase job growth. In fact, several studies suggest that the increased number of jobs related to additional state spending would exceed the losses due to tax increases. At a minimum, it is likely that these effects will cancel each other out. The decline in job growth driven by tax increases will likely offset the increase in job growth created through additional education spending.
However, continued cuts in education spending will cost us jobs and, over the long run, will likely hurt the quality of our workforce, making Colorado less attractive to businesses and individuals looking to relocate.
Passing Proposition 103 is good for Colorado's students, their families and schools. It helps protect against future cuts in education spending, adds to our long-term economic competitiveness and does so without harming our economy. It is the right thing to do.