The wealthy in Colorado threaten to flee a proposed 8.4% tax — but research on millions of high earners suggests most will stay right where they are

Denver estate and tax planning attorney Curtis Bankers told Bloomberg that his clients are worried about the proposal, with some already asking about relocating if it passes.

“All of my clients would be affected by this,” he said. “The main takeaway is they’re all very worried.”

What Colorado’s proposal would change

Colorado’s income tax hasn’t changed much in decades. Since 1987, the state has charged a flat tax. It’s currently 4.4%, whether someone earns $50,000 or $500,000. Amendment 87 would change that, cutting the rate for lower earners while raising it for people with taxable incomes above $500,000.

The tax increase would depend on how much a person earns above $500,000. Under the proposal, income above that amount would be taxed at 7.4%, rising to 7.9% above $750,000 and 8.4% on income over $1 million. Those higher rates would apply only to the dollars in each bracket, not a taxpayer’s entire income.

According to Colorado’s ballot booklet, someone with $550,000 in taxable income would pay an additional $1,175. For someone earning $875,000, that additional tax would reach $11,550. At $2 million in taxable income, it would climb to nearly $56,000.

Supporters argue the higher rates on top earners would help pay for services the state needs. The Economic Policy Institute estimates Amendment 87 would bring in about $2 billion a year for schools, health care and child care. It also estimates about 97% of taxpayers would pay less or see no change.

The measure would also let the state keep the additional revenue beyond the limits imposed by Colorado’s Taxpayer’s Bill of Rights, known as TABOR, which restricts how much revenue the state can retain and spend.

If approved, the new rates would take effect in 2027. But voters are also being asked to consider Proposition136, which would keep the state’s income tax rate capped at 4.4%. The two measures are at odds, and if both pass, the state may have to sort out which rules take effect.