This Election Day, Colorado Voters will decide whether to replace the state's flat income tax with a graduated system. Amendment 87 would lower rates for some taxpayers and raise them for those with higher taxable incomes.
Colorado currently taxes income at a flat 4.4% rate. Under the proposed Amendment, rates would range from 3.7% on the first $25,000 of taxable income up to 8.4% on taxable income above $1 million. Each rate would apply only to the portion of the income within that bracket, not to the entire income of a taxpayer. The state estimates the measure would generate about $2 billion in additional revenue in its first full year.
The new revenue would supplement funding for K-12 education, health care, and early childhood care and education. It would be exempt from the state's TABOR revenue limit; the Blue Book says the measure would not change the mechanism behind TABOR refunds.
Karen Sheek, president of the Montezuma County League of Women Voters, supports the proposal. The statewide League also endorses the amendment.
"People that are making a million dollars or more are not going to be paying the highest rate on their entire income," Sheek said in an interview with KSJD, describing how tax brackets would work.
Those opposed to the Amendment argue the multibillion-dollar tax increase could result in making Colorado less attractive for businesses, encourage high earners or companies to leave, and put jobs at risk. The Blue Book also notes that the proposed brackets would not be adjusted for inflation, so more income could fall into higher brackets as time goes on.
The Colorado ballot also includes Proposition 136, which would cap the state income tax rate at 4.4%. If both measures were to pass, the exact outcome is unclear; the state says the legislature or courts may need to resolve how the dual measures would be implemented.
