Colorado voters approve Amendment 87, imposing higher income taxes on top earners

In a major victory for progressive Democrats, Colorado voters this week approved a $2 billion tax hike on higher-income households and businesses to expand social services and prevent further cuts to the state budget.

The ruling brings back a graduated income tax system to Colorado for the first time since 1986, repealing a provision of the state constitution that required everyone to pay the same income tax rate regardless of how much they earn.

Amendment 87 was leading with 51.4 percent in favor and 48.6 percent opposed as of 7:45 a.m. Friday, when opponents conceded. The Associated Press had not yet called the race.

The measure, backed by a coalition of progressive advocacy groups, imposes six new tax brackets that will raise taxes on households and businesses earning more than about $500,000, while reducing them on the first $100,000 earned per year.

It will generate about $2 billion a year for the Legislature to spend on health care, public schools and child care — an amount that could immediately reverse the state’s bleak budget outlook, with money left over to expand those services.

As a result, the Legislature’s Joint Budget Committee will resume work next week on a spending plan that will not require an additional $1.6 billion in budget cuts, as state fiscal analysts had feared. Voters on Tuesday also approved a separate measure, Proposition NN, that will allow the state to spend more money on education.

These two measures alone would have constituted the largest infusion of new taxes for public services in Colorado since Referendum C in 2005. Taken together, they represent a new era in Colorado politics, as Democrats seek to increase spending on public services beyond the strict limits imposed by the Taxpayer Bill of Rights, or TABOR.

To overcome decades of state opposition to raising taxes, the progressive groups behind the measure tapped into simmering anger against the rich at a time when billionaires are accumulating wealth faster than ever and the middle class is struggling to afford the basics.

Supporters declared victory Thursday afternoon at a rally at La Raza Park in Denver.

“This campaign is historic,” said state Rep. Lorena Garcia, an Adams County Democrat. “We are finally demonstrating that Colorado voters are not happy with Tabor, but Colorado voters want to invest in our future, in our children, in our health, in our communities.”

“What about today? It’s tax day on the rich,” she said to cheers from the crowd.

For a household with a taxable income of $75,000, taxes will decrease by $275 per year. For a family earning $550,000, taxes will increase by $1,175 per year, while someone earning $10 million per year will owe $376,000 more in taxes. The same changes will also apply to corporate profits.

Passage of the measure was a major defeat for conservatives and business groups, who said it would drive up consumer prices and increase financial pressure on businesses in already tough economic times.

“We are incredibly disappointed that Amendment 87 passed,” Loren Furman, president and CEO of the Colorado Chamber of Commerce, said in a statement Friday. “Small business owners work their entire lives to achieve the American dream, but this measure will penalize them for achieving that dream.

“Many of these employers are already struggling with increasing costs to pay salaries and support their employees,” she said. “These tax increases will force businesses to make difficult decisions about wages, hiring and future investments. »

Conservative groups and businesses spent heavily to defeat the measure, blanketing the airwaves with inaccurate ads claiming the measure would have increased taxes on Social Security and veterans’ benefits. It won’t.

Some prominent Democrats also came out against the measure, including Gov. Jared Polis, who said Amendment 87 would hurt the economy, and his successor, Attorney General Phil Weiser, who said the measure did not give voters a clear enough description of how the state would spend the money.

But Democratic officials — and their voters — overwhelmingly supported the measure and the economic philosophy it represented, favoring more public services and higher taxes on the wealthy over the conservative low-tax ideology that has dominated Colorado for decades.

For Karen Vidana, a 22-year-old who works in retail, Amendment 87 was an easy sell.

“I just heard something about taxes helping people and I’m like yes, yes, yes,” Vidana said Tuesday after voting in suburban Denver.

Jeff Wallace, a 67-year-old physician, said his “only reservation” in voting for the measure was whether state officials would spend the money where they promised.

“But I still think a progressive income tax is fair for the average person,” he said after voting in Pagosa Springs. “The richest can afford more. »

Others said they were deterred by the tax hike.

Mackinzie Washington, a 32-year-old landscape construction foreman, was hesitant, but ultimately voted no. “I’m for more taxes on corporations, but not on citizens, and they’ve kind of lumped all that together,” Washington, who is not politically affiliated, said after voting in Westminster. “So you’re kind of stuck between a rock and a hard place there.”

In a separate vote, Coloradans rejected Proposition 136, a conservative ballot measure that sought to counter Amendment 87’s higher tax brackets by setting a top state income tax rate at 4.4 percent.

Opponents of Amendment 87 far outnumber their supporters

Protect Colorado’s Future Coalition was the lead committee responsible for passing Amendment 87. It raised about $2.7 million to support the measure.

The committee’s major donors included Stand for Children, a liberal political nonprofit that does not disclose its donors; Merle Chambers, Denver philanthropist and Democratic megadonor; and the New Era Colorado Action Fund, another liberal political nonprofit that does not disclose its donors.

Colorado WINS, the state employees union, was also a major donor to the group alongside the Bell Policy Center and the Colorado Fiscal Institute, two liberal nonprofit think tanks.

Much more money was spent compared to 87 by a list of thematic committees.

Don’t Price Us Out, the best-funded committee opposing 87. It has raised more than $4 million to fight the initiative, including $1.7 million from the American Prosperity Coalition, a conservative group registered at a shipping store near Dallas; $775,000 from the Leadership for America Fund, another conservative group, registered with a consignment store in Oklahoma City; and $600,000 from the Denver Metro Chamber of Commerce.

Keep Colorado Affordable, another issue committee, raised about $3 million to oppose Amendment 87 and support Proposition 136 — a proposal that sought to counter the amendment’s tax increases by limiting income taxes to their current levels. The committee received $1.85 million from the GOPAC Election Fund, a federal super PAC that gives to Republican candidates and causes; $550,000 from the Denver Metro Chamber of Commerce; and $500,000 from the campaign arm of the Colorado Chamber of Commerce.

The Metro Denver Chamber of Commerce also spent $925,000 to oppose Amendment 87 through the Let’s Go Colorado issue committee, while Americans for Prosperity, a national conservative political nonprofit that does not disclose its donors, spent about $450,000 to fight Amendment 87 through its own issue committee.

In total, the Colorado Sun found about $2 million in donations from the Denver Chamber to groups opposed to Amendment 87.

Finally, Brighter Colorado, an issue committee that supported several conservative ballot measures this year and opposed Amendment 87, raised about $6.1 million, most of it from conservative political nonprofits that do not disclose their donors.

This is a developing story and will be updated.

Colorado Sun writers Jesse Paul, Parker Yamasaki and Shannon Mullane contributed to this report.