On Nov. 3, Colorado voters will have the opportunity to change the state income tax to a graduated system or cap the current income tax rate, potentially shifting how much is collected in state income tax based on individual income.

The two measures were brought by political groups with differing political ideologies, sparking discussion among voters and politicians.

Amendment 87

Amendment 87 — the Establish Graduated Income Tax and Dedicate New Revenue to Education, Healthcare, and Childcare Initiative — would repeal existing law and replace Colorado’s flat income tax rate of 4.4% with a graduated income tax structure in which tax rates increase for higher-income earners, as the measure would remove the constitutional requirement established by Colorado’s Taxpayer’s Bill of Rights for all taxable income to be levied at the same rate. Instead, the amount individuals, estates, trusts and corporations pay would be based on their income, with the lowest rate being set at 3.7% for taxpayers earning under $25,000 a year, with taxpayers that earn above $1,000,001 paying up to 8.4%. Notably, only taxpayers who make over $500,000 a year would be taxed at a higher rate, while everyone below that would remain at 4.4% or receive a tax cut.

While the Colorado Legislative Council estimates that 97% of taxpayers would receive a tax cut if Amendment 87 was passed, the amendment would also generate an estimated $2.7 billion in additional revenue annually for the state. The measure mandates that all additional revenue be allocated to the Colorado Future’s Account, which will be used to fund K-12 public school education, healthcare and early childcare programs in the state.

The amendment was brought by Protect Colorado’s Future, a statewide coalition of over 100 community, grassroots and policy organizations who argue a graduated system would create a more well-funded state budget, which would allow individuals and families to have access to critical programs such as education, healthcare and affordable childcare.

“By tackling this flat income tax and kind of flipping our broken tax system on its head and making the income tax rates people pay more proportional to the level of income they’re making, that is able to fund the programs that have been seeing pretty intense cuts over the past recent time period while also addressing the affordability nightmare of lower-income people spending the majority of their income on different taxes combined,” said Kate Kelly from New Era Colorado, a member of the coalition. 

Proposition 136

Proposition 136 — Establish 4.4% Cap on Individual and Corporate Income Tax Rates Initiative — would establish a cap on the current flat 4.4% rate on individual and corporate income tax rates. Since 4.4% is the existing tax rate, the measure simply puts a cap on that rate, and TABOR still requires voter approval to raise it. The measure was brought by Advance Colorado, a right-wing nonprofit organization founded in 2020 by former Colorado Gov. Bill Owens and former state Sen. Terry Considine. Proposition 136 was brought directly in opposition to Amendment 87, with their current president, Michael Fields, citing affordability as a primary reason for capping the tax rate.

“It’s a counter to the progressive tax increase, we want to keep the flat tax at 4.4% and make sure that it can’t go up,” Fields said in a podcast. “Colorado is expensive already; people are paying too much. We don’t want that amount to increase.” 

Advance Colorado did not respond to The Collegian’s requests for comment as of Oct. 25.

What if both measures pass? 

Since the two measures attempt to change Colorado’s income tax system in distinct ways, it is unclear whether or not they can both be implemented. If both measures pass with a simple majority, the one with the greater number of “Yes/For” votes will be implemented with any conflicting provisions. For example, if both measures pass and Amendment 87 receives more “Yes/For” votes than Proposition 136, then Amendment 87 would be implemented, and vice versa. However, Colorado’s Blue Book acknowledges if both were to pass, the exact outcome is unclear and would need to be resolved by the courts.

Reach Jack Ryan at news@collegian.com or on social media @RMCollegian.