Four months ago, when Gov. Jared Polis signed a package of bills to reduce tax breaks for wealthy people and corporations, and shift savings to low- and middle-income people and small businesses, he lamented that fiscal policy in this state, like the country, rewards moneyed interests at the expense of the rest.
“All too often, it’s the big guys that have the lobbyists and get the special-interest breaks, and as a result, everybody else pays more than they should in taxes,” the Democrat said at the time.
But Polis, whose net worth has been valued in the hundreds of millions, benefitted from the very imbalance he described that day, according to a new report by ProPublica that details how ultrarich political figures such as Polis have been able to avoid paying taxes in some cases, or pay low rates in others.
If you paid any federal income tax in 2013, 2014 or 2015, you paid more than Polis did, the outlet reported. It added that for most of the past decade, the governor’s overall tax rate was less than half of what would’ve been paid by a worker making $45,000 in 2018.
ProPublica’s report published Thursday morning showed that the difference is consistent with a system that has helped many other ultrarich people, including politicians and corporate executives, avoid paying much of their overall wealth in taxes.
That’s because of legal structures that allow wealthy people to categorize their money outside of income taxes. The Denver Post reported three years ago that Polis owed no federal income tax for five years in the early 2000s even as he, then in his 20s, was already worth millions.
Polis was worth over $300 million as of 2017, the nonprofit OpenSecrets reports. That made the former U.S. representative from Boulder among the top five richest members of Congress. He did not release recent tax returns during his 2018 run for governor, because, he said, he wouldn’t do it as long as then-opponent Walker Stapleton also refused. In an interview with Colorado Public Radio on Thursday, Polis didn’t commit to releasing his returns during his 2022 reelection bid, but suggested he’d do it if his as-yet undecided opponent does.
Polis’ office defended him to ProPublica and again in a written statement to The Denver Post Thursday.
“Governor Polis has paid all the taxes that he is required by law and no one has suggested otherwise and he completely agrees that the tax system disproportionately favors the wealthy,” spokesperson Elizabeth Kosar said. “That’s why he has long championed tax reforms to make a better, fairer system, especially for middle class workers and families.”
Kosar also noted the package of tax-related bills Polis signed this summer to close “unfair loopholes and tax giveaways that benefit the wealthy and well connected to increase support for working families and small businesses.”
But fellow Colorado Democratic officials who have worked with — and, in some cases, against — Polis on fiscal policy said the report on the taxes paid by Polis and other rich politicians spotlights fundamental economic inequity in this country.
Officials and advocates respond
State Rep. David Ortiz, a Democrat from Littleton, said people like Polis shouldn’t be “punished for success.”
Ortiz added, however, “I can’t think of anything more un-American, unpatriotic than someone perpetuating a system where those that benefit the most, those that are the wealthiest, don’t pay their fair share.”
Rep. Emily Sirota, a Democrat from Denver who was a lead sponsor on multiple bills Polis touted at the June signing event, said in a text message, “The wealthiest individuals and corporations should pay their fair share, and what we know for certain is that under our current tax system, they often do not. Middle- and lower-income people who are struggling to recover from the pandemic pay a higher effective tax rate than those who are thriving.”
Sirota said she hopes Congress raises taxes on the wealthy, something it is considering as a way to help pay for a $1.75 trillion domestic spending package key to President Joe Biden’s agenda. Polis told Colorado Public Radio that he supports taxing the rich to advance this package.
Sen. Chris Hansen of Denver, Sirota’s co-lead on the tax reform bills, said ProPublica’s report “wasn’t very surprising” because “we have a tax system in this country that is highly beneficial to the super wealthy and is not fair for working families.” But he said it highlights the need to continue reforming the system in future legislative sessions.
For progressive Bell Policy Center Executive Director Scott Wasserman, ProPublica’s findings reflect his group’s experience “that it has been so hard to get this governor to, one, acknowledge how unfair our tax code is, and, two, to really think about the unique obstacles in Colorado to taxing wealth.”
“I’ve got no problem with wealth, but we work with wealthy individuals who use their wealth and privilege to advocate for a fairer tax code,” Wasserman added. “And I guess my surprise has always been, why is he unwilling to acknowledge how this issue plays for him individually and what his obligation is to all the folks who are not punching at such a high tax rate?”
Often on the other side of the tax debates with the Bell Policy Center is the conservative group Colorado Rising State Action, which advocates for lower taxes like the unsuccessful measure on this week’s ballot to cut property taxes. Executive Director Michael Fields said it’s clear why the governor didn’t release his tax returns in the past.
“Wealthy people shouldn’t be getting an advantage, whether that is individuals or businesses … I think that there should be a fair system where small businesses are valued the same as big businesses are, and on the individual side, that individuals and families have the same system that wealthy people do,” Fields said.
In an emailed statement, Colorado GOP Chair Kristi Burton Brown called details in ProPublica’s story “shameful” and also criticized Democrats in the state for “fight(ing) every day to raise taxes on Coloradans” — something Polis has advocated only in narrow cases, such as nicotine, marijuana and pollution taxation.
The GOP frontrunner to oppose Polis in the 2022 election, University of Colorado Regent Heidi Ganahl, herself a millionaire, commented on the ProPublica report through a spokesperson: “If this is true, Jared Polis has a lot of explaining to do. There has been a lack of transparency and honesty in his administration. It would appear this is yet another example of that.”
Asked if she’d release her taxes if she is nominated to run for governor, Ganahl said, “I’m not opposed to releasing my taxes if Jared Polis releases his taxes.”
Many others, including leaders of all four statehouse caucuses, either declined to comment or could not be reached Thursday.
The governor’s money
Polis has either founded or co-founded about 20 companies, starting with an early internet system provider, American Information Systems, that he formed with a couple friends in their dorms at Princeton University. The company sold for $23 million in 1998.
The next year he led the sale of his family’s e-card business, Blue Mountain Arts, for $780 million. It was one of the biggest cash-outs of the dot-com era; just two years after the Polis sale, Blue Mountain sold again for $35 million.
In 2000, Polis began working on a new company, a floral arrangement delivery service that would later be named ProFlowers. In 2006 the company sold for $477 million.
Not all of the money from those and other ventures went to him directly but, as ProPublica’s report notes, Polis was worth an estimated $143 million by 2010.
The governor has often used his money to advance his political career by pouring record amounts into his own campaigns. He’s also used his money to benefit other Democrats, and was a member of the “Gang of Four” — along with Pat Stryker, Tim Gill and Rutt Bridges — that spent big in the mid-2000s to support liberal causes and help Democrats gain a trifecta at the state Capitol.
Polis spent an unheard-of $1.2 million of his own money to get himself narrowly elected to the State Board of Education when he was 25 years old. He spent $1.56 for every vote he won in that race, to his opponent’s one penny per vote.
Polis broke state records when he spent more than $23 million on his own gubernatorial election. The campaign was almost entirely self-funded, as that year he limited campaign donations from individuals to $100. Democratic insiders say he’s prepared to spend extravagantly again for reelection in 2022.
ProPublica’s report shows other ways Polis has used his money to promote his own brand. The report states that the Jared Polis Foundation, spent more than $2 million between 2001 and 2008 on mailers with his name and image. These mailers, close in appearance to campaign mailers, were filed as charitable expenditures, ProPublica reported.
His fiscal policy as governor
As governor, Polis has consistently leaned conservative on fiscal policy. In this area, he was distanced from legislative Democrats the day he took office, as he pushed for a cut to Colorado’s flat income tax. That flat rate, the state’s research has shown, leaves the poor paying higher taxes as a percentage of their overall income.
Statehouse Democrats had no interest in lowering the income tax rate, and Polis’ insistence on this policy stalled negotiations on a 2020 bill meant to eliminate certain tax breaks for the wealthy. Democrats eventually scaled that bill back dramatically in order to please the governor. Polis got his way a few months later when voters passed a cut to the state income tax rate, which Polis never formally endorsed but has openly celebrated since the 2020 election.
More recently, Polis advocated for eliminating the state income tax. Appearing at a conservative conference in Beaver Creek in August with his friend Art Laffer, the economist and former advisor to President Ronald Reagan, Polis said, the state income tax “should be zero.”
“We can find another way to generate the revenue that doesn’t discourage productivity and growth and you absolutely can, and we should,” he said.
But Polis doesn’t have the power to do that on his own, and leaders within the Democrat-led legislature told The Denver Post they would never support such a plan. Most of Polis’ fellow Democrats at the Capitol in fact want to see an opposite policy in which the wealthy pay higher state income taxes. Several progressive groups floated a ballot measure last year to raise taxes on income above $250,000, and lower taxes on income below that mark.
The Post at the time asked Polis to comment on the proposal — which never made the ballot — and the governor declined.
In this week’s election, Polis endorsed a property tax cut widely opposed by Democrats and even some legislative Republicans. That measure failed overwhelmingly, as did a tax on marijuana products to pay for educational programming, which Polis also endorsed.
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