Letter to the Editor: The magnitude of a tax increase

Posted 9/5/18

The Denver City Council, led by Councilman Jolon Clark, has a measure on the November ballot which would generate $46 million a year for parks. This would entail raising the city sales tax from 3.65 …

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Letter to the Editor: The magnitude of a tax increase

Posted

The Denver City Council, led by Councilman Jolon Clark, has a measure on the November ballot which would generate $46 million a year for parks. This would entail raising the city sales tax from 3.65 percent to 3.90 percent, or 25 cents on every dollar. (Life on Capitol Hill, August 2018.)

At first glance, a person might say “What is a measly 25 cents additional tax?” Until you look at the magnitude. To raise $46 million every year, forever, would require, in present value terms, a fund of $1,531,800,000 assuming a 3 percent rate of return, or $1,150,000,000, if one assumes a 4 percent rate of return. And, the council, like many political bodies, has no plans for a sunset provision—i.e., the tax is “forever.”

A sales tax is very regressive, falling disproportionately on lower-income citizens. Regardless of how much of the sales tax that non-Denver citizens pay, versus Denverites, it is still a massive growth of government, and will not contribute to the economic attractiveness of Denver for companies that wish to locate or do business in Denver. I urge the mayor and the council to modify this billion-dollar tax proposal.

Fred Hammer

Property owner in South Denver

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