Polis’ perplexing tax policy

Is trickle-down economics progressive?

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During his State of the State address, Governor Jared Polis called for huge government spending for mass transit, education, job training and crime fighting. But he emphatically called for an income tax cut that would mostly benefit the well-off. He challenged the Democratic majority and Republicans cheered. John Frank of Axios reports that Democrats were “fuming.”

“I’m befuddled,” said Scott Wasserman of the Bell Policy Center, a progressive fiscal think tank. “This is completely inconsistent with everything else in the speech. A flat income tax cut will end up benefiting the wealthy and undercutting the services that low-income and middle-income people rely on.” The state legislature’s non-partisan researchers came to the same conclusion.

Most states have a progressive income tax where tax rates increase along with one’s level of income. That was the case in Colorado for decades, but that changed in 1987 when the state legislature instituted a regressive flat tax, taxing all income at the same rate. In 1992, it was put in the Colorado Constitution with passage of the so-called Taxpayer Bill of Rights (TABOR). If we were to return to a progressive income tax, voters would need to pass a ballot measure.

Polis would like to get rid of Colorado income tax altogether, as nine other states have done. In 2021, he was a speaker at the conservative Steamboat Institute’s Freedom Conference in Beaver Creek. The event’s moderator asked him what he thought the state’s income tax rate should be. Polis said, “It should be zero” to the cheering crowd. He proposed substituting it with a tax on pollution or cigarettes. 

Personal income taxes provide about two-thirds of the money in the Colorado General Fund, the part that covers K-12 education, higher education, parks, the courts, public health and safety.

Polis subscribes to the Reagan-era “supply-side” or trickle down economic theory which claims that a lower income tax will boost the economy. He has been friends with the leading proponent of the theory, economist Arthur Laffer, for three decades. Laffer served on the boards of several of Polis’ businesses over the years. They appeared together as speakers at the Freedom Conference.

Laffer became famous as a leading economist in the Reagan administration. He was also an economic advisor to Donald Trump’s 2016 presidential campaign. In 2019, Trump awarded Laffer the Presidential Medal of Freedom for his contributions in the field of economics. Laffer was also the co-author of Trumponomics: Inside the America First Plan to Revive Our Economy.

In 2021, ProPublica, a Pultizer Prize winning investigative newsroom, revealed that many wealthy political figures have been able to slash their taxes by means of perfectly legal schemes. One of them was Polis. The report by Ellis Simani, Robert Faturechi and Ken Ward Jr. said:

Despite a net worth estimated to be in the hundreds of millions, Polis paid nothing in federal income taxes in 2013, 2014 and 2015. From 2010 to 2018, his overall rate was just 8.2% — less than half of the 19% paid by a worker making $45,000 in 2018.”

Nevertheless, Polis’ politics are hard to pin down. He has a libertarian bent and that’s great at a time when reproductive rights and LGBTQ folks are under ferocious attack. He has been a supporter of single payer health care.

Polis was the U.S. congressman for Colorado’s Second District from 2009 to 2019. Alex Burness, in his excellent biography of Polis for The Colorado Independent in 2018, noted:

A review of Polis’s voting record in Congress shows his is a reliably blue vote — he’s sided against Donald Trump 84% of the time — but also that he has an above-average appetite for bipartisan legislation…”

Congressman Jim McGovern (Dem-Massachusetts) and several others told Burness that “Polis isn’t exactly the type to cut backroom deals or twist arms, but rather that he’s opportunistic, and gets his way by forging unlikely partnerships.”

McGovern said, “He’s someone who is good at convincing you that it’s in your interest to favor a particular issue. He has the skill to persuade people, to try to build relationships with people nobody thinks he would.”

Polis is very smart but unpredictable. However, he is willing to change his mind. For instance, he opposed a ban on assault weapons after the Sandy Hook massacre but now supports gun control.

Let’s hope he shows similar flexibility when it comes to rethinking tax policy.

This opinion does not necessarily reflect the views of Boulder Weekly.