Colorado among states most reliant on income tax

A new report highlighting wealth inequality nationally finds Colorado is among the top 10 states most reliant on income taxes for state revenue.

The report released Monday by the credit ratings agency Standard & Poor’s concludes that income inequality is contributing to slower economic growth in the U.S.

The report says that average annual state revenue growth fell to 5 percent, from 10 percent, from 1980 to 2011. At the same time, the top 1 percent of earners doubled their share of total income.

For states like Colorado, income inequality has meant revenue performance is closely tied to financial markets, according to the report.

Indeed, Colorado’s quarterly revenue forecasts during the last three years have cited taxes on capital gains as one reason for higher-than-expected tax collections.