An individual considers many factors in evaluating the overall value a state of the U.S. can provide for a person or a business. Many of these factors involve non-quantifiable, subjective variables such as the state’s culture, scenery, and people. Yet, evaluating a state’s finances is one of the few quantifiable and objective measures an individual can obtain. Information involving a state’s tax burden, financial status and goals serve useful in assessing a state’s value. After obtaining such information, an individual can enhance their assessment of state’s ability to provide financial favorability to a person or a business. In such a case, research indicates that the state of Colorado, when compared to other states, provide favorable overall economic value for both individuals and businesses. The governmental state of Colorado, like all other states of the U.S., attributes many different taxing sources to obtain funding. The United States Census Bureau measures federal and state taxes in five general taxing categories, which include property taxes, sales and gross receipts taxes, license taxes, income taxes, and other taxes. These tax categories help assess the tax burden on individuals, businesses, and properties. In 2011, Colorado ranked 24th in the U.S. in total tax collected with 9.467 billion dollars (U.S. Census Bureau) . This is a 10.4% increase in total tax collected from 2010’s 8.575 billion dollars (Telles, O’Sullivan, and Willhide, pg. 2). A report released by U.S Census Bureau indicates that this annual increase is caused by a rise in severance tax revenue. Severance tax revenues are taxes placed on extracted natural resources such as oil, gas, and coal (Telles, O’Sullivan, and Willhide, pg. 1). This increase can be caused by either a rise in the severance tax rates or by an increase in production of natural resources
Colorado’s department of revenue services implemented an individual income tax rate of 4.63%. This 4.63% flat rate ranks as the 38th highest in the nation. The 4.63% flat rate is also applied to corporate income tax (Drenkard, Table 11). For the states that have implemented a state sales/use tax, Colorado has the lowest rate in the country with 2.90% (Colorado Department of Revenue). Yet, the average local sales tax is 4.54%, totaling an average combined sales tax of 7.44%; which ranks 15th in highest sales tax in the country. Colorado, along with thirteen other states, collects no state level property taxes. According to Tax Foundation, a non-profit educational and research organization, Colorado is 41st in state tax collections per captia with $1,714. That is well below the national average of $2,287(Drenkard, Table 5). The individual flat rate income tax of 4.63% caused the state to have the 19th most individual income tax collected per capita with $816. That is slightly higher than the US national average of $767(Drenkard, Table 12). When comparing the two figures, individual tax collections are higher nationally while total tax collections were less than national average. This indirect correlation in income tax collected per capita and state tax collections per capita may indicate that Colorado has placed more tax burden on the individual over other taxable categories.
The tax burden Colorado places on individuals and businesses are neither the highest nor lowest in the nation. The lack of a state level property tax places slightly less overall tax burden on individuals and businesses. Yet, Colorado’s financial issues may present the biggest concern for individuals and businesses. The University of Denver issued a report stating Colorado’s fiscal 2012 budget included making a massive 230 million dollar cut in K-12 education, an 81 million dollar cut into higher education and closing a state prison (Griesemer, pg. 6). The report later indicates that many of Colorado’s financial difficulties can be attributed to the housing and financial collapse of 2008. The report claims that