Tax cap change leads early returns

As of 10 p.m. on Tuesday, Proposition NN held 55 percent of the vote, a margin that positions the measure to pass with substantial support from Colorado voters. The ballot proposal, which is legislatively referred, seeks to raise the state’s constitutionally mandated revenue cap. Preliminary results show 45 percent of voters opposed the change.

The measure is part of a trio of tax-related amendments on the ballot. Amendment 87, which proposes a graduated income tax, is the closest of the three. At the same 10 p.m. checkpoint, it led with 50.6 percent in favor and 49.4 percent against. Because the amendment only repeals language in the state constitution rather than amending it, it requires a simple majority to pass.

Proposition 136, a countermeasure designed to block Amendment 87, stood at 47 percent support. This figure falls short of the majority needed for passage. The proposal would cap the state’s income tax rate at 4.4 percent, effectively freezing the current rate and preventing the higher tiers proposed in Amendment 87 from taking effect.

Amendment 87 would increase corporate and individual income tax rates to 7.4 percent for income above $500,000. The rate would gradually rise to 8.4 percent for income exceeding $1 million. These higher rates apply to the top 3 percent of earners. Meanwhile, the 97 percent of Coloradans earning less than $500,000 per year would see a slight reduction in their income tax.

State legislative staff provided a fiscal analysis estimating that Amendment 87 would generate $2 billion in additional revenue for the state by the 2027-28 fiscal year. State analysts projected that Proposition NN would increase the revenue the state is allowed to keep by approximately $500 million annually. This increase is expected to eliminate TABOR refunds for the foreseeable future.

If both Amendment 87 and Proposition 136 were to pass, the conflicting provisions would be resolved based on which measure received more yes votes. Proposition 136 was backed by Advance Colorado, a conservative group that uses dark money to support its initiatives. The group aimed to stop the higher tax rates on wealthy earners by maintaining the current 4.4 percent cap.

Colorado voters are deciding on the most sweeping set of changes to the state’s tax code in 34 years. The outcomes of these three measures will determine how the state collects and retains revenue in the coming years.