Proposition 103 supports education while protecting economic growth
The Bell Policy Center today is releasing a report that reviews research on tax increases and their impact on job growth and economic development. Proposition 103, the only statewide ballot initiative, would raise taxes, returning income and sales tax rates to levels that existed in 1999. The revenue raised would help counteract deep cuts to the state's education system.
Opponents have said Proposition 103 will cost Colorado jobs and frequently have misquoted statistics from a report commissioned by one opposition group.
The Bell Policy Center's report reviews that report, along with another produced by opponents, and summarizes academic research on taxes and economic growth. It also presents data on the effects of tax increases enacted by other states.
In brief, the research shows:
- While tax increases tend to slow job growth, increases in state spending are likely to increase job growth.
- 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 the effect of higher state spending and the tax increases in Proposition 103 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.
- Continued cuts in education spending will cost Colorado jobs.
- Further cuts in education will likely hurt the quality of our workforce, making Colorado less attractive to businesses and individuals looking to relocate.
In terms of attracting businesses – and jobs – to Colorado, 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 for businesses making location decisions.
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.