Race, Taxes, & Colorado’s Regressive Tax Codes

Inequities plague Colorado’s tax system. While the choice between using different taxation methods such as sales tax versus income tax may seem benign on the surface, these choices have profound effects on who pays more of their income in taxes and how taxes are shared among communities across the state. The use of certain tax codes and their inequitable effects connect directly to the history of racial inequity and its ongoing ramifications in Colorado.

Using data provided by the Colorado Department of Local Affairs and the Colorado Municipal League, the Bell Policy Center analyzed tax codes, tax revenue, and demographic details of counties and cities across Colorado. As the beginning of a multi-part series, the Bell is using this data to examine Colorado’s tax codes, its inequitable roots, and the ongoing disparities that exist between communities across Colorado based upon race, geography, and income. Through this analysis, we hope to use further data to examine how Colorado can develop a fair tax code that provides adequate funding for public investment as well as ensures tax codes are designed in an equitable, efficient, and fair manner.

To provide context to current tax rates in the state, this new brief from the Bell discusses the different types of taxes — income, property, and sales and use taxes — as well as the historical background of those taxes and how Colorado’s unique and regressive fiscal system interacts.

Key Highlights

  • The combination of Colorado’s constitutional tax amendments, specifically the Gallagher and TABOR amendments, have led to an increased reliance on local governments for the funding of critical public services and a more regressive tax code in Colorado.
  • As compared to the nation, Colorado is more reliant upon regressive sales taxes to fund critical public services. Local governments in Colorado increasing have relied more on regressive sales taxes and less on property taxes since 1977.
  • Colorado’s state-level tax code is less regressive than those of local governments in Colorado. Constitutional restrictions preventing more revenue to be raised at the state level exacerbate the regressive effects of the overall tax code.
  • The regressivity of Colorado’s tax code builds upon and exacerbates long-standing racial inequality. An overreliance on sales tax has a cumulative negative effect on Coloradans of color, as they are often less likely to own homes and spend more of their income on items affected by sales taxes.

You can read our full brief and analysis below (refresh your browser if you don’t see it) or click here to download your own copy of our research.