Are supporters of Amendment 87 feeling desperate?
Proponents are still trying to dismiss or downplay Amendment 87’s big bracket creep problem, but if it were truly a non-issue, why all the attention and bad-faith arguments against it?
Desperate Dismissals
In a recent Denver Post opinion piece by T. R. Reid published just days after the Post endorsed a ’no’ vote on Amendment 87, the author tries to dismiss the progressive income tax measure’s fatal flaw.
Reid writes, “The Independence Institute’s opposition to the graduated rate scale involves the idea of ‘bracket creep.’ Yes, the opponents say, you will get lower taxes now, but over time your income could creep up to the point where your tax rate goes up. But ‘over time,’ in this case, is a long, long time. If you’re now making $100,000, and your pay goes up 10% annually — three times the rate of inflation — you won’t creep into a higher tax bracket until 2044.”
Let’s break down Reid’s incomplete analysis.
If this 10% pay increase includes 3% inflation (Colorado’s historical average), then that person will move into the next bracket by 2044 (in just 17 years from 2027), as Reid stated.
However, the glaring omission Reid makes, whether from not really understanding inflation or just bad faith, is that his hypothetical $500,000 income filer in 2044 will have a purchasing power of only about $306,000 in today’s dollars.
Meaning, the person would be taxed on almost $200,000 they do not actually have in purchasing power.
If the Amendment 87 tax brackets were indexed for inflation, the person should not cross into the next bracket until 2051, or 24 years.
The Producer Price Index (PPI), which leads the Consumer Price Index (CPI), is up 6.3% year over year and rising, and inflation has been above the Federal Reserve’s 2% target for over five years, suggesting heightened inflation could be here to stay.
This could immediately start closing the distance for many Coloradans and the next bracket, and with even less purchasing power than Reid’s flawed example.
But debating how many years it would take bracket creep to affect someone still misses the point.
Big Picture Economics
As I mentioned in a previous article, debating the timeline of bracket creep is missing the forest for the trees, an obfuscation that supporters of such a bad policy probably prefer.
They do not want Coloradans to see the bigger picture: just because a horrible policy might not directly affect you, or it will take a “long time” to hurt the economy, does not mean we should sacrifice the state’s future for illusory benefits today.
Perhaps conveniently, many of the people dismissing 87’s bracket creep problem are not actually from Colorado.
Or, as someone whose family has been in Colorado since before it was a state, maybe it is naïve for me to want long-term prosperity for the place I love.
Amendment 87 will not fix our economy or the state budget; it’s a long-term tax hike that will steadily push ever more filers into higher brackets through no fault of their own, leaving Colorado worse off.