The silver linings in Amendment 87: Colorado’s new tax will eventually collect less

By Rob Natelson | Commentary, Independence Institute

Colorado voters have narrowly passed Amendment 87, thereby inflicting upon themselves a progressive or graduated income tax—that is, a tax punitive as to income and punishing productivity. Because Amendment 87 was a state constitutional amendment, ideally it should require 55 percent to pass, but advocates employed a loophole that allows amendment by a simple majority.

Amendment 87 will be horrible for Coloradans. In an earlier post, I explained how the progressive tax helped ruin the Montana economy and triggered years of state government budget deficits—and how, once the state dropped rates and largely abandoned progressivity, the state recovered and began to enjoy annual surpluses.

State progressive income taxes reduce economic growth—and therefore state revenue growth—by (1) driving some investors out of state, (2) discouraging new entrants, and (3) discouraging entrepreneurial decisions by people who are and remain state residents—people who, faced with punitive taxation, simply decide not to start new businesses, or expand existing ones.

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