By Jule Pattison-Gordon
Governing
(TNS)
In Brief:
- Coloradans will vote on whether to adopt a graduated income tax—something supporters say would be a fairer way to fund government.
- The proposal comes as Colorado faces greater Medicaid and public school spending needs.
- Opponents, however, say wealthy people will just leave to evade the tax.
This November, Colorado voters will consider whether the state should overhaul its tax code to increase rates for the state’s higher earners. Unlike California’s proposed millionaire’s tax, however, the Colorado proposal would affect a broader swath of taxpayers.
For 39 years, the state has had a flat income tax rate of 4.4 percent. But under the proposed Amendment 87, which will appear on the state ballot this fall, Colorado would introduce a graduated, six-tier income tax ranging from 3.7 percent on income up to $25,000 to 8.4 percent on earnings over $1 million. Anyone making over $500,000 would see their taxes go up.
Supporters of the measure say it’s a long-overdue change that would help prop up underfunded public services, including healthcare, education and childcare. The graduated tax would require higher earners to pay their fair share, advocates say—a message that has gained traction across the country as politicians and activists draw increased attention to the nation’s stark wealth inequality.
“Our flat tax basically means that teachers pay the same rate as [large corporations] or billionaires,” says Kathy White, executive director of the left-leaning nonprofit Colorado Fiscal Institute, a supporter of Amendment 87.
But the measure faces high-profile opposition. Democratic Gov. Jared Polis has called the proposal “bad policy that would destroy our economy.” It also faces opposition from conservative nonprofit Advance Colorado, which introduced a competing ballot measure, Proposition 136, that would keep the tax rate as it is.
“I do not think that you have to raise more taxes,” says Kristi Burton Brown, executive vice president of Advance Colorado. Burton Brown believes the state could solve its problems by spending more judiciously, and fears some employers and wealthy residents may leave the state to evade higher tax rates.
Legal experts in Colorado disagree about how the measures would be implemented if both pass this fall. Polis has raised the possibility that Amendment 87 would reduce taxes for people earning below $500,000, while Proposition 136 would preserve the 4.4 percent rate for the highest earners—an outcome that would reduce state revenue. Others, however, disagree with this view, and the matter would likely be decided in court.
Flat vs. Graduated
Colorado adopted its flat tax in 1987 in part to simplify tax calculation, becoming the first state to swap out a graduated income tax for a flat one. Ten years later, the state’s per capita income was higher than “comparable states” that had stuck with graduated taxes, per a new report by the conservative Cato Institute. The report says flat taxes can be an economic boost and that state GDP tends to rise more quickly after states adopt flat income taxes.
Proponents of graduated taxes, meanwhile, believe them to be inherently fairer, since they put a greater burden of supporting public goods on those with higher means.
“We sought to try to find a solution that could both address the state’s revenue issues while also being responsive to the fact that regular working people can’t afford to pay more at this point in time,” says Chris deGruy Kennedy, co-chair of the coalition behind Amendment 87. “The top 3 percent of Coloradans who are making more than $500,000 per year can afford to pay more without suffering under this economic situation.”
Of course, for that new revenue to come in, higher-earning people and businesses have to stick around to be taxed. States employing higher taxes on the wealthy risk losing the people driving their economy, critics often point out.
Still, proponents say the wealthy are less likely to leave than it may seem. Massachusetts has not appeared to lose a majority of its wealthy residents after passing a wealth tax in 2022, though some data suggests out-migration by high earners increased slightly the year after the measure passed.
Family ties, social circles, local culture and other factors can keep high earners from racing to the door when taxes rise, while educated workforces and good infrastructure might keep companies in the state, White says. If income tax was a big motivator, more people would already be departing for neighboring income-tax-free Wyoming, she says.
Burton Brown agrees taxes aren’t the deciding factor for everyone, “but there’s no reason right now in Colorado to purposefully do something that’s going to kick jobs out of our state and that much revenue with them.”
Backers of 87 expect some wealthy people and corporations could leave, but not enough to outweigh the anticipated revenue boost. Pointing to University of Chicago research, they anticipate 0.56 percent of the millionaire population might depart in response to the graduated income tax. Meanwhile, 94 percent of the additional corporate income tax revenue raised under the new tax scheme would come from multistate companies not located in Colorado, says deGruy Kennedy, meaning it’s unlikely to spur business departures.
Underfunded Public Services?
Like many states, Colorado is facing increased budget pressure. The state caps how much its tax revenue can grow, and Medicaid spending has been rising at a pace that far outstrips that limit. Recent state estimates expect rising healthcare costs to cause a $1.6 billion deficit next fiscal year. The additional money raised by Amendment 87 would be exempt from that revenue cap and go into a fund dedicated to spending on healthcare, childcare and K-12.
Education funding came into the spotlight in 2025, when two independent state-commissioned reports found that Colorado’s public education system needs an additional $3.5 billion to $4.1 billion to adequately serve students. That includes more support for higher-need kids, more staff and better teacher pay. Teachers are “poorly paid and inequitably distributed,” per one report, and schools where much of the student population was living in poverty tended to have lower-paid and less experienced teachers.
Burton Brown believes Colorado should mirror neighboring states and reduce spending on administration to free up more dollars for classrooms. Colorado’s per pupil spending rose from 2021-2025, but ninth to 11th graders’ performances on PSAT and SAT tests fell in 5 out of 6 reading, writing and math categories. The Common Sense Institute, which reported on the scores, says the finding “suggest[s] that additional spending alone does not automatically produce stronger academic outcomes.”
As for healthcare, Polis has said that the state could save on Medicaid spending—and thus free up money for education and childcare—by reducing unnecessary medical procedures.
Photo caption: Daybreak over downtown Denver with a view of the Rocky Mountains to the west. (Acton Crawford/Unsplash)
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© 2026 Governing. Visit www.governing.com. Distributed by Tribune Content Agency LLC.
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