With the tax-filing deadline of April 15 just passed, it’s an apt time to consider just how our federal tax system is serving Coloradans. The tax code is still heavily stacked in favor of wealthy households and big corporations, despite some notable improvements made in the past few years. That bias exacerbates economic inequality and deprives us of hundreds of billions of dollars in revenue we could be using to expand opportunities for working families and to lower public debt.
None of this has escaped the notice of government officials, who have proposed many reforms to make our tax code more fair and bring in much more revenue from those best able to provide it. Unfortunately, some continue to propose more tax cuts to the rich and corporations and force the rest of us to pay for them with funding cuts to essential services like Social Security, healthcare, education, childcare and housing.
Several reports issued this year show how we live under a rigged tax system. The Institute on Taxation and Economic Policy (ITEP) reported that 23 big corporations— including T-Mobile, Office Depot and Duke Energy—though profitable every year between 2018-22 paid zero federal income taxes over that span. (In fact, they paid less than zero, getting back millions of dollars in refunds.) Those five years were significant as the first under a Trump-GOP tax law that cut the corporate tax rate by two-fifths.
Another 32 companies in the ITEP study—including big names like AT&T, Bank of America, DISH Network, General Motors, and Netflix—paid an average tax rate of less than 5%. The remaining roughly 300 companies in the study, a vast swath of Corporate America, paid an average rate of 14.1%. The statutory corporate tax rate is 21%. In 2021 (the most recent year with available data), Colorado families paid an average tax rate of almost 15%.
Americans for Tax Fairness (ATF) and the Institute for Policy Studies discovered that 35 corporations cumulatively profitable over those same five years paid their top five executives more than they paid in federal income taxes. ATF also reported that billionaires had doubled their wealth to a collective $5.8 trillion over that five-year stretch—a wealth gain that may never be taxed; and that incomes of over a million dollars have recently been taxed at only about half the rate they were taxed in the last century.
Some government officials have proposed solutions to all these defects. They want to raise corporate and high-income tax rates while closing loopholes; and tax the wealth gains of the handful of richest households every year, just like worker wages are taxed now. There are also plans to demand more from wealthy inheritors and to end the tax discount on investment income at the highest-income levels.
Several government officials reflexively reject these and other efforts to make our tax code more fair, even while complaining loudly about the debt our broken tax system helps create. They focus their deficit-reduction efforts exclusively on cutting public services and perversely push even more tax cuts for the rich and corporations.
These starkly contrasting views on tax policy will be on full display this election year, and then again at the end of next year when portions of the 2017 Trump tax law are set to expire. Polling shows the American people all along the political spectrum have already made up their minds: they want the rich and corporations to pay more in taxes rather than see cuts to Social Security and other public services integral to working-family success.
With our taxes filed for 2024, let’s start working to make the tax code and the economy it supports fairer for average Coloradans by the time Tax Day rolls around again next year.
Kathy White is a proud lifelong Coloradan who has spent a lifetime fishing, camping, hiking, skiing, and exploring every part of her beloved home state. For more than a decade before helping to found CFI as a standalone nonprofit in 2012, Kathy served as the director of the Colorado Fiscal Policy Institute where she worked on issues ranging from tax credits for low-income families to immigration reform. Prior to that, Kathy worked in policy research and compliance for a national health insurance company.
