Colorado voters have narrowly passed Amendment 87, thereby inflicting upon themselves a progressive (or graduated) income tax—that is, a tax punitive as to income and punishing productivity. Because Amendment 87 was a state constitutional amendment, ideally it should require 55 percent to pass, but advocates employed a loophole that allows amendment by a simple majority.
Amendment 87 will be horrible for Coloradans. In an earlier column, I explained how a progressive tax helped ruin the Montana economy and triggered years of state government budget deficits—and how, once the state dropped rates and largely abandoned progressivity, the state recovered and began to enjoy annual surpluses.
State progressive income taxes reduce economic growth—and therefore state revenue growth—by (1) driving some investors out of state, (2) discouraging new entrants, and (3) discouraging entrepreneurial decisions by people who are and remain state residents—people who, faced with punitive taxation, simply decide not to start new businesses, or expand existing ones.
But there are are two silver linings in Amendment 87—one for Colorado and one for all our competitor states.
To understand the silver lining for Colorado, some background is necessary:
Some government programs generally are good for an economy, and thus offset the damage inflicted by the taxes used to fund them. Programs in this category include police protection and highway construction.
But under leftist leadership, Colorado state government has been stinting law enforcement and highways in favor of programs that do not work well—failing schools, for example, and health care programs that drive up prices and cause dependency. State dollars are even diverted to illegal immigrants.
Amendment 87 will do nothing for police protection or highways. Rather, it is designed to flush even more cash down the financial sewers.
But here’s the silver lining for Colorado: Even though Amendment 87 was designed to bring in more government revenue, it eventually will produce less. This will force the legislature to cut spending on the same destructive programs Amendment 87 is intended to fund.
As for other states, their silver lining is that Amendment 87 will make Colorado less economically competitive and those other states more. ALL the states in our region—those that compete with us most directly—have tax structures that are far better more economically-friendly than Amendment 87. Specifically:
* Nevada has no income tax.
* Wyoming has no income tax.
* South Dakota has no income tax.
* North Dakota has dropped its rate from 7.5% to 2.5%.
* Arizona has reduced its rate from 8.0% to 2.5%.
* Idaho has sliced its rate from 7.4% to 5.3%.
* Kansas has cut its top rate from 5.7% to 5.58%.
* Montana has dropped the top rate from 11% to 5.68%. In 2027, it goes to 5.4%.
* Nebraska has cut its rate from 6.99% to 4.55%, In 2027, it will be 3.99%
* New Mexico has cut its rate from 8.2% to 5.9%.
* Oklahoma has cut its rate from 17% to 4.5%
* Utah has dropped its top rate from 7.75% to 4.45%.
So if you are an economic development officer in any of those competing states, there’s joy in the old town tonight!!!
And all because of one stupid decision by a tiny majority of Colorado voters.
Colorado used to be the pacesetter of the Rockies, but no more: Colorado forfeited its leadership when it adopted Amendment 87.
Robert G. Natelson, a former constitutional law professor, is Senior Fellow in Constitutional Jurisprudence at the Independence Institute and at the Centennial Institute. He authored “The Original Constitution” (4th ed., 2025) and is a contributor to the Heritage Foundation’s “Heritage Guide to the Constitution.”
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