Colorado’s economic landscape is at a critical juncture as business leaders and policymakers weigh the potential impact of Amendment 87, a measure that seeks to overhaul the state’s tax code. Critics argue the move could stifle the innovation and growth that have historically defined the region’s burgeoning tech and security sectors, potentially pushing startups to greener pastures.
The debate centers on replacing Colorado’s current flat 4.4% income tax with a six-bracket graduated system that could see top rates climb to 8.4%. While proponents describe the measure as a strategy to increase revenue from corporations and the wealthy, opponents—including former Denver Deputy Mayor Murphy Robinson—contend the burden will fall squarely on small and mid-sized businesses, many of which are structured as “pass-through” entities.
## The Impact on Tech and Scalability
For the tech industry, where companies often reinvest every available dollar into research, development, and talent acquisition, the proposed tax structure presents a significant hurdle. In the world of security, software, and AI startups, capital is the lifeblood of innovation. Robinson, who founded multiple companies in the security and technology fields, argues that taxing reinvested profits as if they were personal income discourages the very risk-taking required to build the next generation of Colorado businesses.
“When I started my first company, I often gave up my own paycheck so my employees could be paid,” Robinson noted. “Amendment 87 would punish the kind of growth that built my business, taxing money that never actually enters the business owner’s pocket.”
Furthermore, because the proposed brackets do not adjust for inflation, businesses will find themselves pushed into higher tax tiers over time, even if their “real” earnings remain stagnant. This mechanism threatens to create a “success penalty” exactly when a growing company is at its most vulnerable stage of scaling.
## Competitiveness in a Global Market
The push for this tax reform comes at a time when Colorado’s national ranking for business friendliness has seen a notable decline. According to CNBC’s state business rankings, Colorado dropped from 11th to 25th in just one year. This regression, paired with the fact that nearly 100 companies have either left or expanded elsewhere since 2019, has caused significant alarm among economic observers.
Industry advocates point out that Colorado frequently competes for talent and corporate headquarters with states that offer more favorable tax environments. Eight of the 11 states that regularly compete with Colorado for investment either maintain a flat income tax or no state income tax at all. By jumping to a top rate that mirrors high-tax hubs like California, New York, and New Jersey, opponents fear Colorado may lose its appeal to founders looking to build their next headquarters in a cost-effective, tech-forward environment.
## The Future of Colorado’s Economic Engine
The Governor’s Competitiveness Council has expressed profound concern regarding the measure, stating that the tax hike could weaken the state’s standing precisely when it needs to be most aggressive in attracting talent. With the cost of living, insurance premiums, and operational expenses already weighing on local firms, the added complexity of a graduated tax code may be the tipping point that forces entrepreneurs to launch their ventures in more tax-stable jurisdictions.
As the vote approaches, the choice for the business community is clear. Critics of Amendment 87 are rallying behind Proposition 136, which aims to keep the state’s income tax capped at the current 4.4%. For the thousands of Coloradans employed in startups, security firms, and service-based enterprises, the outcome of this vote could determine whether the state remains a place where small businesses can grow into industry giants or if the next generation of Colorado innovators will be forced to look elsewhere to break ground.
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