(The Center Square) – Increased taxes, housing costs and insurance spending are challenging the financial goals of Denver families.
That’s according to a new report from the Common Sense Institute of Colorado, which found household spending in Denver has outpaced income by nearly 30% since 2016.
While many Coloradans deeply feel the increases in rising household costs like grocery bills, the report highlighted there are many other expenses that have seen even steeper rises.
Since 2016, housing prices increased 46%, while total state, local, and federal tax liabilities rose 48%. That means the average household in Denver is now spending $51,001 on taxes and fees, compared to $34,440 in 2023.
The Center Square spoke with Ross Kaminsky, one of the report’s authors, in an exclusive interview regarding these findings.
Kaminsky explained there are many factors contributing to the increase in taxes, including rising sales tax rates, payroll taxes, and other “fees.”
“It’s unclear to me that the state legislature and city councils feel significant pressure to undue those programs or other taxes and fees,” he said. “After all, in Denver and quite a few other towns, voters keep approving most tax increases, which is why Denver’s all-in sales tax rate is now 9.15%, the highest of any large or mid-size city in the state.”
Denver’s increased costs in the past few years have had a real impact on the financial lives of families living in the area. Since 2016, household savings have fallen by nearly half, dropping from an average of $18,885 to $9,876.
Denverites are also choosing to spend the money they do have differently, with the report finding that charitable giving declined 52%.
In a few other key numbers, between 2016 and 2023:
Personal insurance and pension payments rose by 58.5%.
Entertainment spending rose by 49.1%.
Transportation spending rose by 33.5%.
Spending on food rose by 35.2%.
All of these categories saw steeper increases than the city’s cumulative inflation rate of 29.9%. Kaminsky said Denverites are acutely feeling these increases.
“Even if the price of, for example, clothing is about flat, people will still be feeling intense cost-of-living pressure because we buy food every day [and] live somewhere every day,” he said. “In that sense, even the overall 30% inflation understates how most people perceive the increased cost of living.”
This problem is not isolated to Denver. Instead, the report found high prices are affecting many western cities.
“Many of those other cities, however, are historically high-tax: Los Angeles, San Diego, San Francisco and Seattle,” it said. “Denver’s household spending patterns, it appears, are becoming more like those in California and Washington.”
While California still consistently has the highest taxes, they are growing the fastest in Seattle and Denver. Conversely, Phoenix, which has cut its taxes, saw the highest savings and strongest consumer confidence.
The report argued these good financial metrics, and slowing inflation, can be achieved by lowering taxes.
“Local changes in property taxes, sales taxes and fees affect consumer prices while income taxes affect residents’ abilities to spend,” it said.
Kaminsky said it is unlikely the government can undo inflation.
“The only optimism I have for this state’s cost of living issues is that the public is now painfully aware how expensive life has become and that the majority of these cost pressures are caused by the government,” he said. “I don’t think the Denver or Colorado governments will do anything significant to reduce costs, but maybe they’ll slow down their multi-year effort to increase them.”
That said, Kaminsky added he believes housing is one area that state and local government policies could make a real difference.
“These governments should make every effort to make the process of permitting faster and cheaper,” he said. “Faster is more important than most people understand because project delays are very expensive in explicit and opportunity costs.”
