High Income Coloradans pay an outsized share of income taxes. A different take on easing the tax burden for low income earners.
High Income Coloradans pay an outsized share of income taxes
As a follow up to an earlier newsletter on Colorado’s income tax distribution (the graph headlining this post is from that newsletter), I did a summary op ed for Complete Colorado.
That op ed is below and delves into why a progressive income tax in this state would be foolhardy policy.
More, including a link to my earlier newsletter with more context and detail, in the link below.
https://completecolorado.com/2026/05/21/high-income-coloradans-outsized-share-income-taxes/
A different take on easing the tax burden for low income earners
In the first post today, I shared an op ed I wrote which outlines why a progressive income tax (making the rich “pay their fair share”) is a foolhardy idea.
In between the writing of that op ed (based on research in an earlier newsletter) and now posting it here, I was doing research for an upcoming newsletter.
Part of that research involved poking around in the state’s 2024 Tax Profile and Expenditure report. That is the link below.**
I point you to screenshot 1 attached which comes from p 249 in the report.
This graph is a list of taxes paid (as a percentage of the total) broken down by type and into 3 income groups--low, middle, and high. This is for the year 2020 due to lags in data, but I doubt the large-scale patterns have changed much since then.
Let’s look at the top row to orient ourselves to what we see. This row shows that low income earners pay about 7% of their total taxes as income taxes, middle about 31%, and high income earners about 48%. In my op ed I discussed how, by far and away ,the largest tax revenues come from high income earners. This is clearly echoed here.
If one set out to help low income earners, the stated goal of the supporters of a progressive income tax, one would do well to give this chart a look with an eye toward what categories of tax most low income earners pay. Relieving the greatest tax burdens on low income earners would be of the most help to that group.
Low income earners pay relatively little of their total tax burden as income tax. They pay a lot of their total burden as property tax (41.6%), state and local sales and use tax (13.4% and 21.9% respectively), and as specific ownership tax (think the tax you’d pay on your car every year, 5.8%).
If someone had a broken leg and an itch on their back, would you help them by scratching their back?
You take the biggest and most threatening problems in order; helping low income Coloradans with their tax burden ought necessarily start with the descending order of tax burdens they face: property first, followed by local sales and use taxes, and so on. I propose no solution other than to say that it is in these areas that we ought to look first.
What’s curious to me is that this report is public and not at all hard to find. Why supporters of a progressive income tax chose to look in that direction is beyond me. Perhaps it’s an issue of public familiarity. Perhaps it’s an area where they feel they’ll have political success, if not as much success in helping those they say they want to help.
If you caught nothing else from posts 1 and 2 today, catch this. A progressive income tax does not make the rich “pay their fair share”. They pay more than this already. And, low income earners pay a whole hell of a lot more money in property and sales taxes than they do income tax.
**Keep your eyes peeled for future posts leaning on this report as a source. Also, as a quick note: as has happened with other fiscal data, there is often a lag. This is the most current report and it covers 2024 due to processing data and waiting for budgets to finalize.
https://drive.google.com/file/d/1Ydw79EwzI8XVlD44_4z302TKfT3CwGnG/view
Cory,
This is a good analysis using the typical metrics of who pays what. It omits the hidden taxes that hit low-income people hardest. Let me address one less than obvious example. You list “Residential Real Property” taxes but make no mention of commercial property taxes such as the taxes on a grocery store. Taxes on commercial property are often presented as a tax on the rich when they are really a tax on the poor. It should be obvious that the owners of a grocery store such as King Soopers, Safeway, Target, Walmart, Whole Foods, Sprouts and others are not concerned about taxes on the store building or business personal property because they apply equally to all the stores. For the owners, it becomes a pass through to the customers. The costs get imbedded in the price of the food. Since the minimal cost of groceries is essentially independent of income everyone will spend about the same amount to stay alive. Rich people may spend more because they have more discretionary income. Poor people probably don’t buy expensive steaks with SNAP benefits.
As taxes on commercial property like a grocery store rise, they will be a larger share of poor people’s income, but these people are least likely to recognize the issue and complain. Instead, politicians use the premise of taxing the rich to pass taxes that really tax the poor. I have no hard data, but my guess is that poor people would be better off if all taxes on food from tax on the field where the food is grown to taxes on the equipment in the food chain and all payroll taxes imbedded in the cost of food were eliminated along with SNAP benefits. I think eliminating all the taxes would cut the cost of food in half while eliminating the SNAP benefits would make less change.
Eliminating the taxes would also benefit the farmers and others in the food chain because reducing this expense would allow them to sell for less, making them more competitive with foreign suppliers that don’t pay US taxes. A similar analysis would apply to everything else that US residents buy. Eliminating taxes on Americans and moving to tariffs to fund minimal government would lower costs and move jobs to the US from foreign countries.
Another less than obvious way taxes hurt poor people is housing. Much is written about how it would be easier to buy a home if interest rates were lower. The simplest way to lower interest rates would be to eliminate taxes on interest income. It’s easy to see that government entities pay lower rates because the interest is tax free to investors. Eliminate taxes paid by investors that buy residential mortgage backed securities and home buyers could get lower cost loans. Eliminate taxes on insurance companies and rates for homeowner’s insurance would drop. Eliminate taxes on the labor and materials to build a new home, and the price of new homes would drop. If the price of new homes drop, it would take the price of resale homes down.
For a century or more we have been sold the idea that the government is the solution to all problems by simply taxing the rich. Based on what I see, the government is the problem not the solution. The taxes are really paid by the poor and middle class to benefit the rich.
Don Opeka