Let’s cut child poverty in half

Let’s cut child poverty in half

Colorado’s budget is more stable than it’s been in a long time. We’re finally paying off the “budget stabilization factor” for K-12 school funding, which means we’re meeting the requirements of Amendment 23 for the first time in 14 years. 

That’s wonderful, and we should celebrate it. But the reality is that this is a far cry from “fully funding” our education system. The progress we’re making this year–made entirely possible by local property tax revenue growth, by the way–gets us back to 1989 funding levels, and leaves Colorado among the very worst states for education funding in the US.

We can and must do better. And there are so many other underfunded state priorities, including our higher education system and our health care safety net.

There are limits to what we can do about these problems right now. Because of TABOR, the state is prohibited from investing revenues raised above an arbitrary cap to provide a better education system in Colorado. Our record-low income tax rate* of 4.4% generated $3.6B more than the cap last year, and is expected to generate $1.9B more than the cap this year.

While we cannot spend these dollars to fund our education or health care systems, there are still many things we can do through targeted income tax credits and changing the distribution of TABOR refunds–all things that are perfectly allowable under TABOR. 

  • We can cut child poverty in half in Colorado through expanding the earned income tax credit and child tax credit.
  • We can address the housing affordability crisis through the senior housing tax credit, senior homestead exemption portability, and other targeted income tax credits.. 
  • We can pay our child care and home care workers better, and in doing so help make child care more affordable and help seniors stay in their homes longer, with the caring economy tax credit.

These are policy choices. Well-funded, right-wing groups are advocating for ballot measures that will slash local property taxes in ways that will disproportionately benefit the wealthiest homeowners and largest corporations at the expense of our school districts, fire districts, and child welfare offices. 

But many of my colleagues and I are offering a better alternative. While the cost of living is indeed a challenge for a great many Colorado families, it’s an awful lot harder for some than others. That’s why targeting tax benefits makes so much more sense than across-the-board cuts. Our goal is to do everything we can to help regular folks, from low-income to middle-class, afford to live here.

One of the very best tools we have is the child tax credit. Like the expanded, one-year federal credit that cut child poverty in half in 2021 (and was sadly not renewed), Colorado has an opportunity to use funds above the arbitrary TABOR limit to do the same in Colorado for at least the next three years.

My colleagues and I introduced House Bill 1311 to start this important conversation. The bill layers a new Family Affordability Tax Credit on top of Colorado’s existing, modest child tax credit and our existing earned income tax credit. 

This policy help families keep a roof over their heads and keep food on the table, as well as afford child care, health care, transportation, and school supplies. While benefits are greatest for families living below the poverty line, our proposal will also provide tax credits to families earning up to $95K per year.

Expanding the child tax credit will also reduce toxic stress that impairs the brain development of young children. I recently learned that early childhood poverty has been shown to reduce gray matter volume by 8-9%, and that robust investments in reducing childhood poverty have been shown to increase later adult learning by 17% (ZeroToThree.org). Did you know that?

TABOR may be hamstringing the state’s ability to fund many things that desperately need funding, but we can still design tax credits to achieve meaningful goals that will be transformative for a very significant number of people in Colorado. 

I think we should do that. What do you think?

Chris deGruy Kennedy

* It’s worth emphasizing that voters have passed two measures to reduce the income tax over the last few years – Prop 116 in 2020 and Prop 121 in 2022. Together, these measures have reduced state revenue by $370M per year and brought our income tax rate to 4.4%, the lowest level since Colorado moved away from its eleven-tier graduated income tax in 1986 and adopted a flat tax, which was 5.0% in 1987.

It’s also worth emphasizing that these income tax cuts were wildly tilted towards the rich. Coloradans making less than $50K per year only saved an average of $21 and those making between $50-200K saved between $76-236, whereas those making between $500K-1M saved an average of $1370, and those making over $1M per year saved an average of $6194.

These numbers underscore the basic unfairness of a flat income tax. If we’re ever going to adequately fund our schools and other vital public services, we need the wealthiest to pay their fair share.

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