Campaign to replace Colorado’s flat income tax with progressive rate structure runs into stumbling block.
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On June 22, 1987, Colorado became the first state in the nation to move from a progressive income tax code to a flat rate when then-Governor Roy Romer (D) signed House Bill 1331 into law. Now, nearly four decades later, A ballot measure campaign dubbed “Protect Colorado’s Future” (PCF) is seeking to move the state back to a progressive income tax system.
“A coalition led by the Bell Policy Center is pushing the proposal, which is estimated to lower taxes for any person or company making less than $500,000 a year and raise them for those making more,” noted Ed Sealover, vice president of the Colorado Chamber of Commerce, of the effort to put a graduated income tax initiative on the 2026 ballot. “The plan’s method of calculating taxes is complex, with businesses and individuals paying different rates on different portions of income, such as the first $100,000, the amount between $100,000 and $500,000, the amount between $500,000 and $750,000, etc. But Bell estimated it will create an effective tax rate between 4.2% and 4.4% for those earning $500,000 or less and effective rates from 4.9% to 9.2% for those making more, with the highest rate reserved for businesses and individuals generating $10 million or more.”
“Colorado is at a turning point,” said Bell Policy Center president and CEO Chris deGruy Kennedy at the May launch of the PCF coalition’s campaign for a progressive income tax. “For more than three decades, an upside-down tax code has hurt Colorado’s schools, health care, childcare and the environment. We’ve made the wealthy even wealthier while everyone else struggles to keep up.”
However, Kennedy and other members of the PCF coalition recently encountered procedural hurdles that they must address in order for their proposal to qualify for the ballot. PFC’s effort to place a progressive income tax measure on the 2026 ballot ran into a stumbling block on October 15, when the Colorado Title-Setting Board unanimously ruled that PCF’s proposal violates the state’s single-subject rule. “Initiative supporters have until April to get the board to approve a revamped proposal that has a single subject, though it’s likely they’ll be back with an alternate proposal much sooner,” Sealover noted.
Move To Progressive Income Tax Would Make Colorado A National Outlier
Opponents of moving Colorado to a graduated income tax system with higher rates point out that competing states are largely moving in the opposite direction. In the past five years, most state legislatures have enacted income tax cuts and the number of states with a flat income tax has nearly doubled over the past decade.
“Between 2021 and 2025, eight states enacted laws to transition to a flat individual income tax structure while providing income tax relief to taxpayers across the income spectrum,” Jared Walczak, vice president of state projects at the Tax Foundation, explained in an October 8 post on what he and others refer to as the flat tax revolution.
“Six of those flat taxes have already been implemented, while two others are set to take effect in the future,” added Walczak. “Specifically, Arizona enacted a flat tax law in July 2021, followed by Iowa in March 2022, Mississippi and Georgia in April 2022, and Idaho in September 2022. Louisiana joined them in December 2024, followed by legislation adopted in Kansas in April 2025 and Ohio in June 2025.”
“When considering tax movement, it’s best to consider what each state’s competitors are doing,” wrote Rob Natelson, a senior fellow in constitutional jurisprudence at Independence Institute, in an article published October 20. “A state might be able to enact a modest rate hike without much damage if other states are acting the same way. But if other states are cutting taxes and you are raising them, the result can be disastrous.”
“In Colorado, income tax rates have moved down since 2020, thanks to voter initiatives sponsored by Independence Institute,” Natelson added. “But the reduction has been small—from 4.63% to 4.4%. By contrast, most other states’ income tax cuts have been more dramatic.”
Aside from the critique that a progressive income tax measure would have Colorado moving in the opposite direction from competing states in a way that will make Colorado’s business tax climate less conducive to job creation and economic growth, opponents of the campaign for a progressive income tax contend that such a move would harm low- and middle-income households.
“The people hurt most by punitive graduated levies are not ‘the rich,’” Natelson added. “Rich people generally find ways to avoid them. The people most harmed are those working to better themselves. Other victims of graduated taxes—although they may never know it—are the workers who lose the opportunity to thrive in new and improved enterprises. In other words, graduated taxes punish hope, hard work, productivity, upward mobility, and human thriving.”
Jake Fogleman, Natelson’s Independence Institute colleague, recently wrote about another advantage of a flat income tax, which is that it makes it harder for politicians to raise the rate. By “ensuring that tax policy changes affect all taxpayers equally,” Fogleman points out that the flat tax “prevents schemes to impose concentrated costs on small groups of residents.” As a result, added Fogleman, “the flat tax acts as a powerful political disincentive against policymakers making routine requests for higher taxes.”
In moving from a progressive income tax code in 1987 to a flat rate that has since been reduced by voters multiple times, Colorado was well ahead of a national policy trend that has become more pronounced in recent years. Were Colorado voters to approve a ballot measure in 2026 to switch back to a graduated income tax structure, Colorado would go from policy trendsetter to a national outlier.
Source: https://www.forbes.com/sites/patrickgleason/2025/10/24/campaign-for-a-progressive-income-tax-in-colorado-faces-setback/
