Colorado Supreme Court to Decide Amendment 87 Fate After Lower Court Ruling

Denver District Court Judge Heidi Kutcher ruled on October 21 that the state cannot remove Amendment 87 from the November 3 ballot due to registration issues with signature gatherers. The ruling keeps the measure, which would replace Colorado's flat income tax with a graduated system, in front of voters. The opposition has appealed the decision to the Colorado Supreme Court, which has not yet issued a ruling.

The measure would abolish the constitutional requirement that all taxable net income be taxed at one rate, currently set at 4.4%. If approved by a simple majority, the amendment would also add a six-tier marginal tax rate schedule to state law. The lowest tier would tax income up to $25,000 at 3.7%, while income over $1 million would be taxed at 8.4%. The state projects the change would generate approximately $2 billion annually for healthcare, education, and childcare.

Opponents argue the amendment removes protections for specific deductions. Text messages sent earlier this month and paid for by Colorado Dawn, a conservative nonprofit, claimed the measure would raise taxes on seniors and veterans by eliminating deductions for Social Security and military pensions. The state’s Legislative Council Staff, which writes the Blue Book voter guide, states that the ballot question does not remove those deductions. Colorado law already excludes those benefits from taxable income.

Paul Harrison, a finance professor at the University of Denver, said the tax increase for those groups would only occur if their income placed them in a higher bracket. He stated, "I disagree with the claims that Amendment 87 specifically raises taxes on those two groups." Daniel Cole, a consultant for Colorado Dawn, told The Denver Post that differing opinions exist on how courts might interpret the measure. Cole added, "People who say, 'Oh, there’s no way a judge would interpret Amendment 87 that way' are naive."

Outgoing Governor Jared Polis has amplified the concern. In a statement sent Monday, Polis said the removal of constitutional language regarding tax credits could be interpreted by courts to tax all income without exception. He walked back earlier statements that framed the loss of deductions as a certainty. Polis said, "I will be more careful in the future about identifying this as a risk, not a certainty." The governor’s spokesperson noted that an analysis of his personal financial disclosure suggests he could owe between $155,000 and $330,000 under the new system, though not all listed income is necessarily taxable.

Chris deGruy Kennedy, president of the Bell Policy Center, which placed the amendment on the ballot, called the governor’s statement a "blatant lie." Kennedy said the legislature would have to actively choose to include deductions in the definition of taxable income for the claim to hold. He asked, "In what world is that a policy choice that they’re going to make?"

The campaign finance reports show a disparity in funding. Four issue committees opposing the measure have raised $6.2 million. The American Prosperity Coalition has contributed about $1.7 million, and the super PAC GOPAC has given over $1.8 million. The Protect Colorado’s Future Coalition, which supports Amendment 87, has raised just over $2 million. Former oil and gas executive Merle Chambers provided $500,000 of that total.

Michael A. Hancock, a Republican, filed the original lawsuit in September. Represented by Brownstein Hyatt Farber Schreck, Hancock argued that some petition signatures came from gatherers who did not follow state registration rules. Judge Kutcher rejected this argument. The measure remains on the ballot pending the Supreme Court’s review. Other tax measures, including Proposition 136 and propositions NN and 137, also appear on the November 3 ballot.

Michael Fields, president of Advance Colorado, said the group is focused on defeating measures that chip away at the Taxpayer’s Bill of Rights. Fields stated, "I don’t think the tax debates in Colorado are ever over." The Supreme Court has not set a specific date for its decision on the appeal.