Amendment 87’s graduated income tax could cause big employers to leave (Editorial)
We know that the flat income tax in Colorado leaves the state’s middle class holding a heavier tax burden than their wealthiest counterparts, for whom 4.4% is no burden at all
By The Denver Post Editorial Board | mschrader@denverpost.com
PUBLISHED: October 11, 2026 at 5:01 AM MDT
We fear that raising $2.7 billion in taxes in a single year on the backs of Colorado’s largest businesses will do more harm than good for this state. We urge voters to say no to Amendment 87.
Yes, we know that the flat income tax in Colorado leaves the state’s middle class holding a heavier tax burden than their wealthiest counterparts, for whom 4.4% is no burden at all. Yes, we know that this state does need to fund education for thousands of kids and to provide health care for people with disabilities and lower-income residents.
But both J.J. Ament from the Denver Metro Chamber of Commerce and Gov. Jared Polis told us that major employers are threatening to leave if Amendment 87 passes. Just as concerning is that other Colorado businesses, the ones making at least $3 million in taxable profit, will see their tax bill almost double overnight.
We do not believe opponents’ dubious claims that removing the language in the Constitution prohibiting a graduated income tax in Colorado will automatically end all tax deductions, increasing taxes on seniors, veterans and anyone else who uses deductions and credits. Nor do we believe that this will hit Colorado’s smallest businesses, who will see a tax decrease as long as they are not making quite a bit more than $500,000 a year in taxable profit.
However, we do believe that many of Colorado’s businesses are struggling amid rising costs, as is Colorado’s middle class. Now is not the time to raise taxes in this state, especially not an enormous $2.7 billion tax that would be pulled out into a special fund where lawmakers couldn’t use it during a recession to backfill the existing budget obligations. We both like that this money will be reserved for education and healthcare spending, and worry that lawmakers might use a good chunk of the new money to set up an expensive new program like universal childcare or healthcare.
No one will name any names, but it’s not hard to imagine some of this state’s seven Fortune 500 companies leaving Colorado in pursuit of lower taxes: Arrow Electronics, Newmont, EchoStar, DaVita, Ball Corp., VF Corp., and Ovintiv.
These companies pay good salaries, often pay property taxes and pay sales taxes on goods and services they buy from other Colorado businesses. The net impact of a single Fortune 500 company is huge, which is why states play the frustrating and never-ending game of “pass the business” with such intensity.
Colorado had 10 Fortune 500 companies headquartered here in 2023. Two — Liberty Media and Dish Network — didn’t leave but dropped off the list, facing their own financial difficulties. QVC moved to Pennsylvania, with a 7.49% corporate income tax, amid a restructuring and threat of bankruptcy. The drop to seven is not good news for tax receipts or employment.
Together, those seven companies reported $1.13 trillion in profits in 2025. Not all that profit is taxable in Colorado, but some of it is.
Forty states, including Colorado, use an apportionment system to charge companies taxes on the profit from sales and business conducted in their state. Because Colorado charges income taxes on out-of-state companies using apportionment, a good chunk – 94%, according to a forecast conducted for the proponents of this measure — of the new revenue generated by a 4% surcharge on profits over $1 million will come from out-of-state businesses.
But some businesses, like defense contractors, don’t have sales in this state if they are not operating here.
Lockheed Martin, whose corporate headquarters is in Maryland with a corporate income tax rate of 8.25%, could move its substantial Colorado operations to a state with a lower tax rate like Texas. They would take thousands of jobs with them and much of their Colorado tax liability.
In 2017, Colorado was the beneficiary of just such a shuffle. Lockheed moved its operations out of San Diego, avoiding California’s 8.84% corporate tax. Colorado also gave the company $12.6 million in tax credits over 15 years to bring the 550 jobs to Littleton. Those tax credits expire sometime around 2032. Lockheed just announced it will bring more new jobs here this year.
Colorado currently ranks 33rd overall in the nation for tax competitiveness according to the Tax Foundation. New York is ranked 50th, and Wyoming is first. Our relatively low income tax rate helps us stay in the middle of the pack. An increase to that rate could drop us further down the list.
We want to be clear that many of Colorado’s largest companies can afford a 4% surcharge on any taxable profit they make over $1 million, and their tax burden would still be lower than in many states. But we do worry about some of our mid-sized businesses, and of the threat that companies might leave.
We don’t like this game America’s largest companies play. But we are at their mercy. More important than anything is that Coloradans have good-paying jobs because individuals pay the same tax rate as businesses: 4.4%. Colorado’s government now is funded on the backs of the middle class. We appreciate all the hard-working, taxpaying Coloradans who don’t threaten to stop paying their taxes despite our unfair tax system that asks them to shoulder more of the burden and offers them few of the tax deductions and loopholes the rich enjoy to lower their effective tax rate even more.
Perhaps someday states will agree to a mutual disarmament and stop this arms race to the bottom. But that is unlikely given that large companies also can easily move abroad to international tax havens, avoiding America’s corporate tax rate of 21%, which Trump reduced from 35% in 2016 in an attempt to bring businesses back to the U.S.
For now, Colorado would be wise to accept that we are able to moderately tax companies at 4.4%.
