Colorado considers tax hike on wealthy despite concerns about departures

Colorado is debating Amendment 87, a ballot measure that would raise income taxes on individuals and businesses earning over $500,000 while lowering rates for those earning less, aiming to generate about $2 billion for education, childcare, and healthcare, theprowersjournal.com reported.

Opponents, including the National Federation of Independent Business, argue that higher taxes will drive big businesses and well-paying jobs out of the state, warning of economic harm, according to theprowersjournal.com.

However, experiences from Massachusetts, which increased income taxes on earnings above $1 million in 2022, indicate that the feared mass exodus of wealthy residents did not occur, with most outmigration coming from lower earners, based on IRS data analyzed by the Boston Globe and cited by theprowersjournal.com.

The Massachusetts tax increase has also generated more revenue from wealthy taxpayers than expected, suggesting that higher taxes on the rich can be an effective funding mechanism without causing significant departures, theprowersjournal.com noted.

Colorado's current flat income tax system, which taxes all earners at the same rate, would be changed by Amendment 87 to a graduated system similar to Massachusetts, theprowersjournal.com explained.