Supporters of Amendment 87, Colorado’s progressive income tax ballot measure, believe that Colorado can copy other states’ bad tax policies and somehow avoid the consequences.
It can’t.
Other states have already implemented progressive taxes and continue to suffer the consequences, while Colorado actually tends to gain from their losses.
New Jersey’s Advance Warning
As previously explained, Amendment 87 is fatally flawed because it does not adjust the new marginal tax brackets for inflation, meaning everyone will eventually experience higher tax burdens through no fault of their own.
But don’t just take my word for it; look at how New Jersey’s bracket creep is hurting the state economy and the working class.
As John Reitmeyer describes in NJ Spotlight News, the state has no bracket-adjustment policy, which means people are being hurt by inflation-driven tax increases.
Reitmeyer cites Janelle Fritts, senior policy analyst at Tax Foundation: “The years when peoples’ taxes are going to go up the most because of a lack of inflation indexing are also the years when they’re stretched the tightest,” Fritts said. “That’s when it’s going to hit the most, and the timing is terrible.”
Tax Foundation also ranks New Jersey 49th in overall tax competitiveness and 48th in income taxes because of its high, noninflation-adjusted marginal rates and complex tax code.
Colorado has already fallen 11 places since 2020, from 22nd to 33rd overall in the same tax competitiveness ranking—before implementing an income tax system as flawed as Amendment 87.
Fixing What Isn’t Broken
Despite growing concerns about Colorado’s economic direction, it remains a destination for people moving from higher-tax states.
For example, according to a report by the Institute for Reforming Government, Wisconsin lost $2.83 billion in Adjusted Gross Income (AGI) and 57,438 citizens to lower-or no-tax states in 2023 alone.
Colorado was one of the top destinations for Wisconsinites, gaining $160.8 million in AGI and 2,869 residents that year.
If Colorado wants to stay attractive to potential residents, just mountains and sunshine won’t cut it.
Right now, in more ways than one, Colorado is at risk of becoming the “New Jersey of the West.”
Rejecting Amendment 87’s badly flawed tax brackets would preserve some of Colorado’s competitiveness, which should not be a terribly controversial ambition.