Amendment 87 will have a far-reaching impact on Colorado taxpayers

There are dueling tax measures on the 2026 ballot in Colorado.

Proposition 136 simply caps the state's flat income tax rate at the current 4.4%.

Amendment 87 is a paradigm shift in how income taxes are calculated.

Opponents say it would be the biggest tax increase in Colorado history. Supporters say 97% of Coloradans would see a tax decrease under the measure.

It turns out, they are both right. 

According to nonpartisan fiscal analysts, the measure would increase taxes by up to $2.7 billion the first full year.    

But only individuals and businesses that have incomes of over $550,000 a year would pay the increase. According to Colorado Department of Revenue data, 3% of individual taxpayers fall into that category, and 5% of businesses do as well.

The ballot measure changes the Taxpayer Bill of Rights (TABOR) which says all net income must be taxed at the same rate and instead creates different tax rates for different income levels.

• $25,000 or less would be taxed at 3.7%
• $25001 to $100,000 would be taxed at 4.2% 
• $100,001 to $500,000 would be taxed at 4.4%
• $500,001 to $750,000 would be taxed at 7.4%
• $750,001 to $1 million would be taxed at 7.9%

And any income above $1 million would be taxed at 8.4%, which is nearly double the current rate.

State analysts estimate anyone making below $550,000 would see a tax cut of $175 to $325 per year.

Anyone making above $550,000 would see a tax increase of $1,175 to $55,925 per year. 

All the additional tax revenue would be exempt from the state's current spending cap and could only go to programs related to K-12 education, health care, and childcare.  

Supporters say the measure creates a fairer tax code by aligning rates with taxpayers' financial means, while also helping fund public services as the state faces budget shortfalls.

Opponents note the state budget has grown 72% over the last 10 years as taxes have climbed by nearly $20 billion.   

They say the tax cuts will pale in comparison to the job losses as more businesses leave the state.

Since 2019, 98 companies have left or expanded elsewhere, according to the Colorado Chamber of Commerce.

Opponents say the state's low tax rate is one of its selling points and that would be lost if Amendment 87 wins.

Proponents say most of the new tax revenue will be paid by companies that are already based out of state.

Gov. Jared Polis, who opposes the measure, says most of new tax revenue will come from small and medium sized businesses. He says Amendment 87 will hurt Colorado's competitiveness and its economy.

Polis says it could also impact tax deductions for seniors and veterans and possibly allow lawmakers to increase taxes further.

CBS Colorado spoke to economists who say there is nothing in the measure that impacts deductions or the mandate that lawmakers seek voter approval before raising taxes.

If both Amendment 87 and Proposition 136 pass, the impact will depend on which measure receives the most votes.

If Amendment 87 does, all the new tax brackets take effect.

If Prop 136 does, the lower rates may take effect, but the highest rate would be capped at 4.4%.