By Paul Harrison
Published October 23, 2026
Amendment 87 proposes to significantly alter a cornerstone tax policy Coloradans have relied on for 34 years. By replacing the current 4.4% flat tax, guaranteed with Colorado’s Taxpayer’s Bill of Rights (TABOR), with a graduated income tax system, the measure would abandon an equal-rate policy in place since 1987. While 26 states utilize progressive tax brackets, passing Amendment 87 would force Colorado to surrender a core pillar of its nearly three decades of taxpayer protection.
Flat taxes champion proportional fairness, arguing that a single rate protects individual, joint and corporate taxpayers from targeted rate hikes while keeping the tax code simple and predictable. By contrast, graduated tax systems raise tax rates as taxable income grows, grounded in the belief that wealthy earners should bear a larger share of the tax burden.
Amendment 87 proposes a targeted tax shift: raising the top income tax rate to 8.4% for earnings over $500,000 while delivering modest tax relief to everyone below that threshold — a maximum reduction of $325 per year. In its first full year alone, this adjustment would generate an estimated $2 billion in net, new revenue and ties the tax increase to fund K-12 education, healthcare and early childhood care.
By applying the $500,000 threshold to both single and joint filers (MFJ), Amendment 87 creates a direct “marriage penalty.” Federal and most other tax policy traditionally scales brackets to protect joint-filing households — such as the 2026 federal standard deduction, which doubles from $16,100 for individuals to $32,200 for married couples filing jointly. By ignoring this distinction, Amendment 87 unfairly penalizes married couples earning a combined $500,000 compared to two single individuals earning the exact same amount. Beyond creating a marriage penalty for joint filers, the policy broadens the tax burden even further by imposing higher rates across the board and affecting single individuals, married couples and corporations alike.
Because Amendment 87 fails to index its $500,000 threshold for inflation, routine wage growth will inevitably drag more working Coloradans into the higher tax brackets every year — a process known as “bracket creep.” This expanding tax burden creates a serious threat of tax-driven migration. According to IRS data compiled by the Tax Foundation, high-tax states consistently lose billions in taxable income — including a net $21.8 billion lost by California and New York alone in a single year — while zero-tax states like Florida and Texas gain in citizens and, correspondingly, greater economic activity. Without inflation protections, Amendment 87 will steadily trap more and more Colorado residents in higher taxes, threatening to drive Colorado’s top earners — and the vital employment, jobs and revenue they generate — straight out of the state.
Higher taxes make Colorado a less attractive place to launch or grow a business. By penalizing success and driving out top earners, the state risks chilling economic growth, slowing down hiring and forcing employers to relocate elsewhere. Palantir Technologies — an enterprise AI and data analytics giant — relocated its global headquarters from Denver to Miami in February 2026, just six years after fleeing high-tax California for Colorado. Demonstrating a broader trend toward lower-tax states, financial services leader TIAA (Teachers Insurance & Annuity Association) similarly wound down its Denver presence between 2024 and 2026, transitioning key executive functions to Frisco, Texas.
While Amendment 87 offers modest tax relief for households earning under $300,000, the savings are small — just $177 to a maximum of $395 per year. Coloradans must weigh whether a few hundred dollars in short-term savings is worth surrendering almost four decades of state constitutional taxpayer protections. In return, voters gain a more complex tax code and an increase in state bureaucracy created to manage $2 billion in new government spending. The amount that will ultimately be made available to school districts will depend on future decisions made by Colorado’s General Assembly.
Amendment 87 is not the only proposed tax change on the Colorado ballot this November. Proposition 136 Income Tax Rate Limit is also to be considered. Proposition 136 is designed to set a 4.4% limit on state income tax for individual and corporate taxpayers — equal to the current flat tax rate Coloradans experience. Proposition 136 does not alter the current rate. It creates a state law setting this rate, 4.4%, as a maximum beginning Jan. 1, 2027.
Depending on how voters respond to Amendment 87 and Proposition 136, Colorado faces four potential outcomes. If neither measure passes, or if only Proposition 136 succeeds, Colorado’s flat tax system remains intact. If only Amendment 87 passes, the state will adopt a graduated income tax. The most chaotic scenario occurs if both pass because the measures directly contradict one another. The ultimate result will depend on vote totals — or worse, be handed over to Colorado courts to settle in protracted litigation.
Though Amendment 87 leverages popular investments in children and healthcare to sell a $2 billion tax restructuring, its long-term consequences may outweigh its modest individual savings. By abandoning an equal-rate flat tax in favor of an unindexed graduated system, Colorado risks penalizing marriage, stunting business growth and accelerating the flight of capital and jobs to other states. Depending on the outcomes of Amendment 87 and Proposition 136, Coloradans may forfeit Colorado’s tax policy to the courts, leaving judges, rather than voters, in control of the state’s income tax structure and economic destiny.
Paul Harrison is an assistant teaching professor at the Reiman School of Finance in the Daniels College of Business at the University of Denver.
