About Amendment 87 — the Income Tax Fairness Act

No. This is absolutely false. The GIT has no impact on any tax breaks, deductions, exemptions, or credits, and in fact cuts tax rates for seniors and veterans making less than $500,000 per year. Opponents of the GIT are basing their claim on the language being struck from the Colorado Constitution. The language currently says:

Any income tax law change after July 1, 1992 shall also require all taxable net income to be taxed at one rate, excluding refund tax credits or voter-approved tax credits, with no added tax or surcharge.

They’re saying that the revised language, which would strike “at one rate excluding refund tax credits or voter-approved tax credit…added tax”, is a mandate meaning that all income “be taxed,” conveniently ignoring the phrase that follows, which says “with no added surcharge.” One could just as easily disregard “at one rate” from the existing language to reach the same conclusion. This allegation was made during challenges to the single subject this spring, and the Colorado Supreme Court didn’t find it to be persuasive. Neither do we.

 When the billionaire and corporate advocates challenged the graduated income tax’s single subject determination in front of the Colorado Supreme Court this spring, their legal briefs raised the question of whether the constitutional change created ambiguity in the interpretation that could lead to broader ramifications beyond allowing a graduated income tax rate structure. Had the language of the graduated income tax question done so, the Colorado Supreme Court would have been forced to rule that the measure contained multiple subjects and therefore could not proceed to the ballot. Instead, when they reviewed the language, the Colorado Supreme Court affirmed that the measure only contained one subject.

Absolutely not. The GIT has no impact on TABOR refunds. 

Here’s why. If it passes, nonpartisan staff will annually calculate the income tax revenues raised by the new rate structure. From that, they will subtract the revenues that would have been collected under the old structure. That net amount of new revenue will be moved into a TABOR-exempt account where it can be retained and spent on K-12 education, healthcare, and child care. But all of the revenue that would have been generated by the old rates remains subject to TABOR’s revenue limit and refund requirements.

It’s also worth noting that the graduated income tax has no impact on the requirement for voter approval of tax increases. The legislature cannot raise taxes now, and they will not be able to raise taxes after the measure passes.

If both measures pass, the one with the most votes controls what happens. If the graduated income tax gets more votes, then 97 percent of Colorado residents get a tax cut and the graduated income tax structure takes effect. However, if the rate cap gets more votes, the new graduated income tax structure will not take effect following an evaluation by the Colorado Supreme Court of which provisions of the two measures are in conflict. 

What opponents of the graduated income tax measure conveniently forget is that the Colorado Supreme Court already has looked at whether the graduated income tax brackets are “severable.” That’s a basic legal principle that examines components of a policy or a contract to determine whether they can be considered independently from one another or if they’re inextricably connected to one another. 

The billionaire and corporate advocates have argued that the cuts and increases were two different subjects, as they unsuccessfully tried to keep the graduated income tax off the ballot by arguing it violated Colorado’s single subject rule. We argued that they were part of the same whole, and the Supreme Court agreed, ruling that:

The very nature of a graduated rate tax structure is that some taxpayers will be taxed at a lower rate than others — and perhaps, as here, some even at a lower rate than the single flat rate being replaced. That does not imply “logrolling” — which requires joinder of provisions that are “disconnected or incongruous” with “at least two distinct and separate purposes.” Id., at P7, 321. There is nothing “disconnected or incongruous” in these measures, and there are no “distinct and separate purposes.”

What that means is there will be no piece-mealing of the rate cap and the graduated income tax. If the cap gets more votes, then working Coloradans will not get a tax cut. If the graduated income tax passes, they will.

No. These claims are based on a smidgeon of a percent change, and does not in any way take into consideration the benefits and improved services that rank-and-file employees of these companies would see if the graduated income tax were to pass. To the contrary, 97 percent of small businesses in Colorado will get a tax cut under this proposal.

Let’s dig into the details.

It’s true that large businesses take a state’s tax rates into consideration when they decide whether to relocate here. But these impacts are far smaller than some claim.

Corporate taxes, for instance, are not based on where a corporation is located; they’re based on where they sell their products. Ninety-one percent of corporate income taxes in Colorado are paid by national corporations, the vast majority of which are not based here. There’s no reason to think higher tax rates will cause them to stop selling their products or services in Colorado, let alone cause Colorado-based corporations to leave.

As for individual taxes, including those paid by owners of pass-through businesses like S-corps and LLCs, no co-owner of a passthrough business will pay more until their take-home pay, including their share of the company’s profit, exceeds $500,000 per year. Any business owner making less than $500,000 per year will get a tax cut, making Colorado’s income taxes on small businesses lower than 20 of the 41 other states who levy income taxes.

The other claim is about businesses wanting to attract talented individuals for jobs that pay more than $500,000 per year. It’s plausible that state tax rates weigh on these businesses for this reason, but there’s an abundance of evidence about what has happened in real examples of states raising tax rates. Businesses need educated talent to employ, so a well-funded K-12 education system would help them. Businesses pay a lot in health insurance premiums, and so bringing down health care costs by investing in those programs will reduce overall business costs. Businesses need employees who are able to work, and so a state where there is affordable and accessible child care everywhere will increase the number of available employees, as parents will no longer have to choose between a paycheck or having their child cared for.

According to a 2025 study from the University of Chicago, every 1 percent increase in the income tax rate for income over $1 million can be expected to cause 0.14 percent of a state’s millionaire population to leave. The graduated income tax increased the rate by 4 percent, and could be expected to cause 0.56% of the population to leave and 99.44 percent to stay.

Additionally, since Massachusetts passed its millionaire’s tax in 2022, the state has seen its millionaire population grow, the net worth of millionaires grow faster than the rest of the population, and revenue came in 50 percent higher than expected.

Our good friends at the Colorado Fiscal Institute recently broke down these claims in this blog post.

The money from the increased taxes will go into the Colorado’s Future Fund. By law, money in that fund can only be used for K-12 public education, health care, and child care. Every year there will be a public audit, report, and hearing to ensure that the funds were used appropriately. There will be significant checks and balances to make sure that the funds are used as intended by the voters.

Colorado’s Constitution currently requires a flat income tax, meaning everyone pays the same rate regardless of income. Adopting a graduated income tax would require voter approval of a constitutional change.

The main reason that the table shows a tax decrease for those making between $500,000 and $1 million has to do with high-income wage earners who report income in multiple states. The average Colorado Taxable Income for these individuals is only a percentage of their federal taxable income. Only the Colorado Taxable Income is subject to the graduated income tax structure. Another reason has to do with the interaction of Adjusted Gross Income and Colorado Taxable Income. After deductions and exemptions, many people – especially those with higher incomes – are able to reduce their taxable income. Because of this, many people who make more than $500,000 have a taxable income lower than that, and would therefore qualify for a tax cut. Additionally, most people within that income band are clustered closer to the $500,000 range, making the deductions even more impactful. 

 So, when you hear us say that only people making more than $500,000 will see a tax increase, that’s because we are talking about Colorado Taxable Income (versus Adjusted Gross Income.) It’s important to note this wrinkle has already been taken into account in the $2 billion revenue estimate.

Under the proposal, only the highest-income households and corporations would pay higher tax rates. Households earning more than $500,000 annually would contribute more, while 97 percent of Coloradans would pay less. And only the 5 percent of corporations making more than $500,000 per year in profit (after paying out all employee salaries and other business expenses).

The new tax structure would apply to both individuals and corporations. So, small businesses making below $500,000 per year will actually see a tax cut. A new analysis by the nonpartisan Institute on Taxation and Economic Policy of our graduated income tax measure found that 94 percent of revenue from increased corporate taxes would come from non-resident businesses. In other words, of the small portion of corporations that would pay slightly more on net (not gross) revenue of over half a million dollars in a year, the vast majority of them aren’t even based in Colorado.

The proposal is estimated to generate more than $2 billion annually, but that number is subject to minor fluctuations based on macroeconomic conditions. These funds must be invested in K-12 public education, child care, and health care services that support Colorado families and communities.

Estimated Revenue: $2.0 billion ($2.7 billion max)

Eligible Uses: K-12 Public School Education, Health Care, Early Child Care and Education