On November 3rd, a ballot measure designated Amendment 87 will put to Colorado voters the question of whether to shift from the state's current flat income tax rate to a graduated, tiered taxation structure. Under such a structure, individuals would face progressively higher tax rates on each additional tier of earnings, generating greater overall revenue for the state.

Under the proposal, most Colorado residents would see their annual tax liability reduced by several hundred dollars. Those in the uppermost income bracket — the top 0.01 percent of earners — may face a near-doubling of their annual tax liability.

The proposal targets disparities in wealth distribution while funding primary and secondary schooling, medical services, and programmes supporting young children. Any revenue generated through the proposed adjustment would be held in a dedicated fund, accessible to legislators exclusively for those designated purposes and solely as an addition to existing allocations in those areas.

Revenue generated through the tax adjustment would fall outside the Taxpayer's Bill of Rights (TABOR) revenue cap, meaning those funds would neither be returned to taxpayers nor reduce any refunds owed from future overcollections.

Those in opposition argue that the measure would function as a tax increase exceeding $2 billion, with broad consequences for Colorado's economy. A policy research organisation with free-market leanings has linked flat-rate taxation to rises in personal earnings and broader economic expansion, contending that such structures, which tend toward reduced overall rates, enable market forces to guide resource allocation.

The state applies a uniform tax rate across all qualifying income, a structure commonly referred to as a flat tax. Colorado currently applies a flat tax rate of 4.4% on all taxable earnings, from the first dollar through to one million. Under Amendment 87, the existing flat tax would be replaced by a six-bracket structure in which earnings above each threshold are subject to progressively higher marginal rates.

Earnings between $25,000 and $100,000 are subject to a 4.2% tax rate. Earnings between $500,000 and $750,000 carry a tax rate of 7.4%. Income above $1 million would face a tax rate of 8.4%. Couples who file jointly follow the same income brackets, but benefit from larger standard deductions than those filing as individuals. Corporate earnings would be subject to a uniform tax rate.

Among the organisations backing the proposal are the Bell Policy Center, the Colorado Fiscal Institute, Great Education Colorado, New Era Colorado, the Colorado Center on Law and Policy, and the Colorado Statewide Parent Coalition. Groups opposing the measure include Advance Colorado, which has put forward Proposition 136 to freeze tax rates at their present level, alongside the National Federation of Independent Business, Americans for Prosperity, and various other business and fiscally conservative organisations.

Gov. Jared Polis, a Democrat barred from seeking another term, has repeatedly voiced opposition to the proposal.

Data from the Colorado Department of Revenue, compiled by the Bell Policy Center, shows that roughly 850,000 state tax filers — representing around one in four — reported annual earnings below $25,000. Owing to applicable exemptions and deductions, earners at the 25th percentile have a Colorado taxable base of roughly $4,816 on average. Under current rules, individuals earning that level of taxable income owe roughly $212 in state income tax annually. The measure would reduce utility bills by approximately $34.

A typical Colorado taxpayer earns around $57,000 annually, of which roughly $35,000 is generally considered taxable income at the state level. Their annual income tax liability amounts to approximately $1,517. The measure would reduce that expense by nearly $200.

Someone earning $97,754 annually ranks within the upper third of Colorado residents by household income. Individuals at that earnings level typically owe state income tax on roughly $66,000 of their total annual earnings. Their annual state income tax obligation amounts to roughly $2,900. Amendment 87 would reduce that figure by over $250.

Households earning $335,000 or more annually fall within the top five percent of income earners across Colorado. At that earnings level, state taxes typically apply to roughly $302,000 of the total amount. On average, they pay roughly $13,300 in state income taxes annually. Since the portion of earnings falling within lower tax brackets would be taxed at reduced rates, those individuals stand to receive a tax reduction exceeding $300.

Households in Colorado's top one percent earn roughly $1.33 million per year, of which approximately $1.3 million is generally considered taxable under state law. Among Colorado's highest-earning tax filers — a group of roughly 340 individuals — yearly gross income averages around $280 million, of which approximately $270 million per filer falls within the state's taxable base. Their state income tax liability currently stands at approximately $11.9 million annually. The proposal would increase that total by approximately $10.8 million.

Department of Revenue figures show that most registered companies in Colorado declare no taxable income. When businesses with net losses after deductions are factored in, taxable income under Colorado's system is reported by roughly the upper two-fifths of filers. Businesses reporting annual revenue of $572,000 fall within the top five percent of all earners. That enterprise would face a state income tax liability of approximately $25,200 under the existing framework.

Under Amendment 87, households could see their annual energy costs rise by approximately $1,800. Corporations in the uppermost income bracket declare an average taxable income of approximately $27 million annually. At present, they pay roughly $1.2 million in taxes on that sum, whereas Amendment 87 would raise their state liability to nearly $2.25 million — an increase of over $1 million.