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Amendment 87, a ballot measure in front of voters on Nov. 3, would overhaul Colorado’s tax code to help fund education, healthcare, and early childhood programs.
The ballot measure, which requires a simple majority to pass, asks Colorado voters to eliminate the state’s flat tax rate, which was baked into the constitution after the approval of the 1992 Taxpayer Bill of Rights. TABOR, as it is known, also caps how much money the state government can keep and spend.
The amendment would instead create a graduated income tax with six tax brackets in place of the flat rate. The proposal would reduce the tax bill for the majority of residents. Meanwhile, Colorado taxpayers who make more than $500,000 would see their tax bills increase.
Proponents say the ballot measure would raise billions more each year in state revenue that would boost funding for education and healthcare programs. Meanwhile, opponents have filed a competing ballot measure to maintain the state’s existing 4.4% tax rate and argue that Amendment 87 would diminish the state’s economic competitiveness.
What does Amendment 87 do?
Currently, Colorado assesses all workers and businesses a 4.4% income tax.
The six new brackets proposed by Amendment 87 would create an ascending tax rate from 3.7% to 8.4%. The first three income brackets would require taxpayers or businesses making below $500,000 a year to pay the current tax rate of 4.4% or less. The rate would increase for taxpayers or businesses making $500,000 or more a year, capping taxes at 8.4% for those earning more than $1 million.
Colorado’s ballot information book says the measure would go into effect in 2027 and generate about $2 billion more in state revenue in 2028, although the total would depend on the state’s economy and other factors. The state expects the amendment would generate more money in later years.
The tax proposal is also structured so new money raised by the rate change wouldn’t be subject to TABOR limits. This means money generated by the state’s new graduated income tax wouldn’t be required to be refunded to taxpayers.
Who is against Amendment 87?
Amendment 87 faces a rival ballot measure in Proposition 136, which would cap the state income tax rate at 4.4% of federal taxable income for individuals and corporations. The measure wouldn’t change anything for taxpayers, but instead create a block to Amendment 87’s passage.
If both 87 and 136 pass, normally the measure with the highest number of yes votes would take effect. However, the state’s ballot book says if both measures are passed, the outcome is unclear and the state Legislature or a court will need to resolve the conflict.
Proposition 136 was filed by conservatives, including Michael Fields, who is president of conservative advocacy and policy group Advance Colorado. The pro-TABOR group has repeatedly sought to ward off changes to the state’s tax system.
In an email, Advance Colorado Vice President Kristi Burton Brown said Amendment 87 “hurts working families by sending their jobs out of the state and endangers state tax deductions for seniors on Social Security and military veterans’ retirement.”
The Colorado Secretary of State website also lists several conservative-backed groups in opposition to Amendment 87, including Keep Colorado Affordable, Let’s Go Colorado, and Affordable Colorado.
Who is in favor of changing Colorado’s income tax rate?
Advocates say Amendment 87 would reduce taxes for 97% of Colorado taxpayers.
The measure was placed on the state ballot by the Protect Colorado’s Future coalition, which includes education and community advocacy groups and is led in part by liberal fiscal policy organizations The Bell Policy Center and The Colorado Fiscal Institute.
Great Education Colorado Executive Director Lisa Weil, who is part of the coalition, said Amendment 87 puts Colorado education on a path toward a sustainable future. She added that the money would create an investment now and for the next generation.
“This is probably the best opportunity that I have ever seen to make our tax system more fair,” Weil said.
Jason Gonzales is a reporter covering higher education and the Colorado Legislature. Chalkbeat Colorado partners with Open Campus on higher education coverage. Contact Jason at jgonzales@chalkbeat.org.
