For nearly four decades, Colorado’s flat tax has provided taxpayers with a simple and predictable framework. Adopting a multi-tiered structure as proposed in Amendment 87 wouldn’t just complicate the tax code and burden small businesses. It would hike taxes, dealing a profound blow to Colorado’s status as a competitive destination for talent and investment at a time when other states are pursuing tax simplification and attracting jobs.
Colorado made history in 1987 when it became the first state in the country to transition from a graduated income tax to a flat tax. This means that everyone pays the same tax rate, regardless of how much they earn. Under Amendment 87, Colorado’s flat rate of 4.4% would be replaced by six new progressive brackets with a top rate of 8.4%.
Proponents of Amendment 87 contend that this new progressive structure will cut taxes for 97% of Coloradans and that only top earners will face a higher burden. However, this rosy picture fails to account for the distortions that come with levying progressively higher tax rates on income, especially in a state that has benefited from the stability of a flat tax for decades.
It’s difficult to overstate the benefits of a flat tax. For starters, taxing every additional dollar of income at the same rate reduces the penalty for earning more. This means workers and entrepreneurs don’t have to worry about making professional or business decisions simply to minimize their tax liabilities.
A single rate also simplifies tax administration, which, in turn, provides a meaningful check against the growth of the bureaucracy. A flat tax also makes it straightforward for taxpayers to estimate their liability under different income scenarios. This transparency provides individuals and businesses with the predictability needed to make plans about where to invest or settle down.
Colorado has benefited tremendously in recent years from the certainty provided by a flat income tax. Taxpayers are increasingly mobile and willing to relocate to new states based on local tax burdens. The latest IRS interstate migration data show that Colorado ranks 15th in the nation when it comes to gaining new net residents, and 11th overall in gaining tax filers who earn over $200,000 annually. Indeed, Colorado’s millionaire population nearly tripled between 2013 and 2022.
These high earners don’t just bring their families and businesses—they also contribute substantial tax revenue to state coffers. In 2026 alone, National Taxpayers Union Foundation estimates that inbound migration will generate the state of Colorado approximately $203 million in additional tax revenue. And this only captures the immediate benefits of new arrivals. The real gains accrue over the long run as high earners and their families put down roots and continue paying income, property, sales, and other taxes.
Amendment 87 puts Colorado’s competitive advantage at risk. High tax burdens have proven to be a strong motivator for higher-income taxpayers to flee from states like New York even when neighboring states are similarly tax-happy. But the stakes are even higher for Colorado, where taxpayers can find a more attractive tax environment by simply crossing a state line. Wyoming levies no income tax, while the top rates for Nebraska, Kansas, Oklahoma, New Mexico, and Utah all fall under 6%. By codifying a top rate of 8.4%, Amendment 87 would make Colorado a stark outlier in the region.
Higher income tax rates would also directly impact small businesses that are organized as “pass-through entities,” which means the business’s income is reported on the owner’s individual tax return. Nearly half of Colorado’s workforce is employed by small businesses, the overwhelming majority of which are organized as pass-through entities. This means small business owners with more than one million dollars in taxable income would see their top marginal rate nearly double—leaving less money to invest, hire, and expand opportunities for everyday Coloradans.
Fortunately, Colorado voters have another option on the ballot. Proposition 136 would cap the income tax rate at 4.4% for individuals and businesses, helping Coloradans keep more of what they earn while providing greater certainty about the future. More importantly, it would signal to taxpayers across the state and around the country that Colorado remains open for business.