Colorado voters face pivotal choice on graduated income tax to address budget deficits

Key points

• Amendment 87 would replace Colorado's flat 4.4% income tax with six graduated brackets, raising the top rate to 8.4% for incomes over $1 million.
• The measure is projected to raise approximately $2 billion annually, with funds restricted to K-12 education, healthcare, and childcare.
• Supporters argue 97% of taxpayers would see tax cuts, while opponents warn of economic harm and potential business exodus.
• The proposal requires only a simple majority to pass, as it repeals a constitutional provision rather than adding new language.
• Proposition 136, a competing measure, would cap the state income tax at 4.4%, creating a potential conflict if both pass.

Background

Colorado has faced annual budget deficits exceeding $1 billion, driven largely by rising Medicaid costs. The state's flat tax structure, established by the Taxpayer's Bill of Rights (TABOR) in 1992, has limited revenue flexibility. Amendment 87 seeks to address these fiscal challenges by introducing a graduated tax system, aligning Colorado with most other states. The measure follows earlier discussions on similar initiatives, such as Initiative 195, and reflects broader national trends in high-earner taxation, as seen in Washington State's recent ballot measures.

How outlets are covering it

Supporters, including the Bell Policy Center and public school advocates, emphasize the measure's potential to reduce taxes for 97% of taxpayers while generating revenue for critical services. They argue it addresses both budget and affordability crises. Opponents, such as the National Federation of Independent Business and Gov. Jared Polis, warn of economic harm, job losses, and a 'marriage penalty' due to uniform tax rates for individuals and households. CBS News highlights that while 97% of taxpayers would see cuts, the top 3% would pay significantly more, with potential revenue up to $2.7 billion. The Durango Herald notes the measure's alignment with other states' high-earner taxes but raises concerns about neighboring states' lower rates. Reporter-Herald letters express concerns about business exodus and the long-term impact on taxpayers.

Why it matters

Amendment 87 could reshape Colorado's fiscal landscape by addressing budget deficits and funding public services, but it risks economic disruption if high earners and businesses leave the state. The outcome will influence the state's ability to fund education, healthcare, and childcare, with potential long-term implications for economic competitiveness and equity.

What to watch

Voters will decide on Amendment 87 and Proposition 136 on November 3, 2026. If both pass, the measure with more votes may prevail, but legal challenges could arise due to conflicting provisions. The state's budget office will monitor Medicaid costs and revenue projections to assess the measure's long-term impact.