Fiscal Reform & Progressive Revenue

The Problem

Denver is facing a fiscal crisis. Revenue growth has stagnated while costs - driven by population growth, inflation, and deferred infrastructure maintenance - continue to climb. The city’s proposed 2025-2026 budget includes painful spending cuts: reduced services, potential city employee layoffs, and slashed funding for homelessness initiatives at the exact moment the crisis is worsening.

The root cause is structural. Denver’s revenue system is dangerously dependent on sales tax, which is both regressive (hitting low-income families hardest) and volatile (dropping during economic downturns when services are needed most). Denver’s combined sales tax rate of approximately 8.81% is among the highest in Colorado and well above the national average. A family earning $35,000/year pays a higher effective tax rate than a family earning $350,000 - because sales taxes take a larger share of income from people who spend most of what they earn.

Meanwhile, Denver’s property tax rates are among the lowest of any major US city, and Colorado’s Taxpayer’s Bill of Rights (TABOR) constrains the city’s ability to raise revenue without voter approval. The result: a city that is growing fast, demanding more services, and structurally unable to pay for them.

Denver’s Revenue Structure

• Sales and use tax: Approximately 50% of General Fund revenue - an extraordinarily high dependence on a single, regressive source
• Property tax: Denver’s residential assessment rate was cut to 6.7% (2024), among the lowest effective property tax rates of any major US city. Commercial property rates have also declined
• Other sources: Lodger’s tax (tourism), franchise fees, permits, fines, and intergovernmental transfers
• TABOR constraint: Any new tax or tax rate increase requires voter approval. This is a political hurdle, not an impossibility - Denver voters have approved tax measures (e.g., the 2020 Climate Protection Fund, the 2018 mental health sales tax)

What Denver Currently Does

Denver’s budget is approximately $1.6 billion annually. The mayor’s office proposes the budget, City Council amends and approves it. In recent years, the city has relied on one-time federal COVID relief funds (ARPA) to fill gaps - money that has now run out, exposing the underlying structural deficit.

The city has not undertaken a comprehensive revenue modernization effort. Instead, budget cycles have been managed through incremental cuts, hiring freezes, and deferred maintenance. Each year the problem compounds: deferred maintenance becomes emergency repairs, understaffed departments deliver worse services, and residents lose trust in government’s ability to function.

Denver has a dedicated sales tax for climate (0.25%, raising ~$40M/year) and mental health (0.25%), both approved by voters. These demonstrate that Denver voters will approve new revenue for specific purposes - but they also add to the overall sales tax burden on low-income families.

Who Opposes This (and Why)

Commercial real estate interests and large property owners benefit from Denver’s extremely low property tax rates and will oppose increases. TABOR advocacy groups (like the Independence Institute) oppose any tax increases on principle. Some business groups will frame progressive revenue as “anti-growth.” Counter: Denver’s current path - cutting services, underfunding infrastructure, and overrelying on regressive sales taxes - is the actual threat to growth and livability.

Our Solution

1. Progressive Property Tax Reform

Denver’s property taxes are far below what a city of this size and cost requires. Reform must be progressive - not across-the-board increases that hit working families.

• Tiered commercial property tax: Higher rates for large commercial properties (over $5M assessed value), with lower rates preserved for small businesses and owner-occupied commercial spaces
• Luxury residential surcharge: Additional property tax on residential properties assessed above $1.5M (affecting approximately the top 5% of Denver homes)
• Primary residence protection: Homestead exemption increase for owner-occupied primary residences, ensuring working-class homeowners see no net increase
• Vacant land tax: Tax on undeveloped land held speculatively in high-demand areas, incentivizing development or sale (complements the existing vacancy tax on empty units)

2. Replace Regressive Sales Tax Revenue with Progressive Alternatives

The goal: reduce Denver’s dependence on sales tax from ~50% to ~35% of General Fund revenue over 8 years, replacing it with progressive sources.

• Large employer head tax: Businesses with 50+ employees pay a per-employee tax (modeled on similar programs in Seattle and San Francisco). Scaled by revenue: large corporations pay more per employee than mid-size businesses. Exemptions for nonprofits and small businesses
• Commercial parking tax: Tax on commercial parking revenues downtown and in high-traffic commercial districts, incentivizing transit use while generating revenue
• Short-term rental tax: Ensure Airbnb and similar platforms pay equivalent lodger’s tax rates, closing the gap between hotel and short-term rental taxation
• High-income services tax: Targeted tax on high-end professional services (legal fees above $500/hour, financial advisory services, luxury consulting) - services consumed disproportionately by high-income individuals and corporations
• Sales tax reduction: As progressive revenue grows, reduce the general sales tax rate by 0.5% over 8 years, providing direct relief to low-income families

3. Revenue Dedicated to Working Families

New revenue streams are earmarked for services that directly benefit Denver’s working class:

• 30% to affordable housing (Social Housing Authority, Housing First, community land trusts)
• 25% to public transit (free RTD for low-income residents, bus rapid transit expansion)
• 20% to community safety (STAR program expansion, youth services, violence intervention)
• 15% to infrastructure (deferred maintenance, green stormwater, parks in underserved neighborhoods)
• 10% to reserve fund (building fiscal resilience for future downturns)

4. Fiscal Transparency & Anti-Austerity Budgeting

• Public budget dashboard: Real-time, line-item budget tracking accessible to every resident, showing exactly where money goes
• Equity budget analysis: Every department budget scored on equity impact - who benefits, who is harmed by cuts
• Anti-austerity principle: During economic downturns, Denver increases social spending (counter-cyclical budgeting) rather than cutting services when they’re needed most. The reserve fund enables this
• Participatory budgeting integration: 10% of capital budget decided directly by residents (cross-reference: participatory budgeting policy)
• Annual fiscal health report: Independent audit of Denver’s fiscal position, revenue trends, and long-term obligations, published publicly

5. End Corporate Subsidies and Tax Giveaways

• Audit all existing tax increment financing (TIF) districts and corporate incentive packages for actual job creation vs. promises
• Clawback provisions: If a company receiving city incentives fails to meet job creation or wage commitments, the money comes back
• No incentives for companies paying below $25/hour (cross-reference: living wage policy)
• Sunset clause: All corporate tax incentives expire after 5 years and must be renewed with public review
• Public disclosure: All corporate subsidies, tax breaks, and incentive packages published in a searchable public database

International Evidence: Progressive Revenue Works

The US is an outlier in how little it taxes property and wealth at the local level. Most peer nations fund local services through progressive property taxation, not regressive sales taxes. Denver’s current model - high sales tax, low property tax - is exactly backwards from a progressive perspective.

How We Pay For It

This policy is the “how we pay for it.” Estimated new annual revenue:

• Progressive property tax reform: $80-120M/year
• Large employer head tax: $40-60M/year
• Commercial parking tax: $10-15M/year
• Short-term rental tax equalization: $5-10M/year
• Corporate subsidy clawbacks and sunsets: $10-20M/year (variable)
• Total new progressive revenue: $145-225M/year
• Less: sales tax reduction (phased): -$30-50M/year at full implementation
• Net new revenue: $115-175M/year

This revenue closes Denver’s structural deficit, funds the platform’s proposals, and shifts the tax burden from working families to corporations and wealthy property owners - while actually reducing the sales tax rate.

Frequently Asked Questions

“Won’t businesses leave Denver if taxes go up?” Denver’s effective business tax rates are far below peer cities like Seattle, San Francisco, Portland, and New York. Businesses locate in Denver for talent, quality of life, and market access - not because of our low property tax rates. The cities with the highest progressive taxes (San Francisco, New York, Copenhagen, Vienna) are also the most economically dynamic. The real business risk is a city that can’t fund its infrastructure, transit, or public safety.

“Doesn’t TABOR prevent this?” TABOR requires voter approval for new taxes - it doesn’t prevent them. Denver voters approved the climate tax in 2020 and the mental health tax in 2018. When voters understand what they’re getting in return, they approve progressive revenue measures. The key is transparency and dedicated funding.

“Why not just cut spending?” Denver’s budget is not bloated. Years of incremental cuts have already reduced services to the point where response times are slower, parks are undermaintained, and the homelessness crisis is worsening. Cutting further means cutting services that working families depend on: transit, libraries, recreation centers, road maintenance, and emergency services. Austerity doesn’t fix structural revenue problems - it just makes them less visible until they become emergencies.

“Isn’t a head tax bad for employment?” Seattle’s head tax (initially proposed, then modified) was controversial because it applied to all large employers equally. Our proposal is scaled by company revenue, exempts small businesses and nonprofits, and is set at levels well below what would affect hiring decisions. The per-employee cost is a fraction of what companies spend on office space, benefits, or executive compensation.

“Property tax increases hurt seniors on fixed incomes.” Our proposal includes a primary residence homestead exemption increase that protects owner-occupied homes. Seniors on fixed incomes living in their own homes would see no net increase. The progressive tiers target luxury properties and large commercial holdings - not the family home.

“Denver voters will never approve tax increases.” Denver voters approved a 0.25% sales tax for climate action in 2020 (by 63%) and a 0.25% sales tax for mental health in 2018. What voters reject is vague, unaccountable spending. What they approve is specific, transparent investment with clear returns. Our proposal dedicates every dollar to specific purposes and includes public tracking.

References

• Denver Annual Budget. (2024-2025). Office of the Mayor, Budget and Management Office.
• Colorado Department of Revenue. Sales tax rate tables. (Denver combined rate ~8.81%.)
• Denver Assessor’s Office. Property assessment rates and residential assessment rate data.
• Colorado TABOR (Article X, Section 20, Colorado Constitution). Voter approval requirements.
• Institute on Taxation and Economic Policy. (2018). “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States.” (Regressive sales tax impact data.)
• Lincoln Institute of Land Policy. Property tax rate comparisons across US cities.
• Portland Clean Energy Community Benefits Fund. Annual revenue reports. ($60-90M/year.)
• City of Vienna. Housing and fiscal policy reports. (Social housing funding model.)
• Denver Climate Protection Fund. (2020 ballot measure). Revenue and allocation reports.