Colorado tax measure to generate $2 billion annually after flat rate era

A new ballot measure would generate approximately $2 billion annually for Colorado, funding healthcare, education, and childcare. Amendment 87 proposes to abolish the state’s requirement for a flat income tax, which currently stands at 4.4% for all residents regardless of earnings.

If voters approve the measure on November 3, the state would implement a six-tier marginal tax rate structure in state law. The lowest rate, 3.7%, would apply to the first $25,000 of income. Rates would then rise to 4.2% for income up to $100,000 and hold steady at 4.4% for income between $100,001 and $500,000. Higher earners would face steeper increases, with rates of 7.4%, 7.9%, and 8.4% applied to income brackets above $500,000, $750,000, and $1 million, respectively.

The amendment requires only a simple majority to pass because proponents chose to delete language from the state constitution rather than add to it. This strategy avoids the 55% supermajority threshold usually required for constitutional additions. The measure strikes the phrase requiring all taxable net income to be taxed at one rate. It also removes wording that prohibits taxing refund tax credits or voter-approved tax credits.

Opponents have focused their campaign on the removal of these constitutional protections. They argue the changes could allow courts to eliminate tax deductions for Social Security benefits and veterans' pensions. Conservative groups, including the dark-money nonprofit Colorado Dawn, have sent text messages to voters claiming that seniors and veterans will see their taxes increase because of these eliminated deductions.

Legal experts and nonpartisan analysts dispute this interpretation. The state’s Legislative Council Staff, which writes the official voter guide, states that current law already excludes these benefits from taxable income. Paul Harrison, a finance professor at the University of Denver, noted that older taxpayers would only face higher taxes if their income fell into a higher bracket under the new rates, not because deductions were automatically removed.

Outgoing Governor Jared Polis has amplified the opposition’s concerns. In a statement, Polis said the removal of specific constitutional language could be interpreted by courts to mean all income, including Social Security and pensions, is taxable without exception. He acknowledged that he previously stated the tax increase was a certainty, but he now frames it as a risk depending on judicial interpretation.

Chris deGruy Kennedy, president of the Bell Policy Center which placed the measure on the ballot, called the governor’s statement a blatant lie. He argued that the legislature would have to actively choose to include deductions in the definition of taxable income for the changes to take effect. He stated that no major political party is looking to remove Social Security deductions from the tax code.

The financial battle between the two sides has been intense. Four issue committees opposing the measure have raised a combined $6.2 million, with significant contributions from the Colorado Chamber of Commerce and the federal super PAC GOPAC. The supporting committee, Protect Colorado’s Future Coalition, has raised just over $2 million, with $500,000 from former oil and gas executive Merle Chambers. A lawsuit filed in September by Republican Michael A. Hancock to remove the measure from the ballot was rejected last week by Denver District Court Judge Heidi Kutcher, though an appeal is pending before the Colorado Supreme Court.