Frequently Asked Questions

Want the quick facts about Fair Tax Colorado and Initiative #271? Download the one pager now (en español) or click here to learn more about how Initiative #271 works (en español).

What's the problem? Why does Colorado need more funding?

Despite our booming economy, many Coloradans feel left behind. Colorado’s current tax code is not fair and does not raise adequate revenue to address the impacts of a growing population and a changing economy. For example:

  • Our roads, bridges, and transit systems need to be modernized in order to keep up with population growth, but we can’t afford to pay for necessary improvements.
  • The vast majority of our school districts have teacher shortages because Colorado has the least competitive teacher wages in the country. 
  • The opioid and methamphetamine epidemics are a challenge that businesses, educators, health care, faith communities, and public agencies must work together to combat. But without adequate public resources for treatment, mental health care, and community-based prevention, these epidemics will continue to cause unacceptable suffering.
  • Right now, public health agencies can only provide 61% of the resources needed for basic community protections, like clean water and immunizations. In December 2019, EPA lowered the air quality status of Denver and eight other counties from “moderate” to “serious.”
How does this make Colorado's tax code more fair?

Colorado is one of only nine states in the U.S. that has a flat income tax structure and is one of only four states that constitutionally requires a flat income tax. Changing our tax code to allow for income earned above certain thresholds to be taxed at higher rates will provide a sustainable source of revenue to more adequately and equitably fund the impacts of a growing population and a changing economy.

Is this about TABOR?

No. This is about creating a fair tax for Colorado, which will provide adequate and equitable funding to address the impacts of a growing population and a changing economy.

How will we know if Initiative #271 actually meets the needs of a growing population and changing economy?

Initiative #271 creates a fair tax review commission that will consist of 25 appointed members who are responsible for reporting to the governor, the General Assembly, and the public about the effects of the state income tax system's rate structure. In particular, the commission is asked to report on:

  • The state revenue and funding for public services provided by the state
  • The distribution of income among taxpayers
  • The business climate, the ability of the state to attract and retain business

The commission’s report shall include recommendations for modifications to the rate structure of the state income tax system.

How much money will this raise and how will it be spent?

According to the most current estimate provided by Legislative Council Staff in the Fiscal Impact Statement, Initiative #271 will raise $2 billion. Revenue collected from the increased individual income tax is exempt from the state TABOR limit as a voter-approved revenue change. Revenue is required to be appropriated and spent as follows:

  • 50% to supplement current funding for pre-primary through 12th grade education, and
  • 50% to address the impacts of a growing population and a changing economy, of which no more than 10% may be expended for administrative costs.
How will the revenue be generated?

Initiative #271 repeals the constitutional requirement that all taxable net income be taxed at one rate. Beginning in tax year 2021, the measure replaces the current 4.63% tax on income earned by individuals and fiduciaries with a graduated income tax, whereby Colorado taxable income earned above certain thresholds is taxed at higher rates. For tax year 2021, the rates in the measure are:

  • For taxable income up to $250,000 = 4.58%
  • For taxable income from $250,000 up to $500,000 = 7%
  • For taxable income from $500,000 up to $1,000,000 = 7.75 percent;
  • For taxable income from $1,000,000 and up = 8.9%

Want to know how much you'd pay under a fair tax? Calculate your rate now!

How does a tiered tax table/graduated income tax work?

Under a tiered tax structure (sometimes referred to as a graduated income tax or progressive income tax), income is taxed at a similar rate until it increases to the next bracket (i.e. the next marginal level of income). All incomes are taxed at the starting base rate. For example, imagine two brackets: 5% tax rate for all income under a $100 and 10% tax rate for all income over $100. A person with a $200 income would be taxed in the following way: ($100 x 5%) + ($100 x 10%) = a tax of $15.

Want to know how much you'd pay under a fair tax? Calculate your rate now!

If Initiative #271 passes, who will pay less in income taxes? 

Because 95% of Coloradans have taxable income below $250,000, that means 95% of Coloradans will pay less in taxes. For all Coloradans who have taxable income above $250,000, they will also experience a lower rate on the first $250,000.

Want to know how much you'd pay under a fair tax? Calculate your rate now!

In addition to funding education, what other public investments can be addressed with the revenue generated?

Public investments are the programs and services all Coloradans collectively use and pay for that make our communities strong, such as schools, libraries, bike trails, transportation, and mental health services. The revenue raised through Initiative #271 will go toward these and other areas Vision 2020 members have focused their work on for several years.

Why isn't a single tax rate (flat tax) equitable? 

Income tax is just one portion of state and local taxes in Colorado. Once you factor in things like property and sales tax, the poorest 20% of Coloradans actually pay a higher share of their income in taxes than the top 1%.

What is an "effective tax rate"?

Your effective tax rate is the average rate you pay based on all your taxable income.

How is Initiative #271 different than 2018's Amendment 73?

Amendment 73 only raised money for education and increased state corporate income tax. It also changed property assessment rates and required 55% approval to pass. Initiative #271 raises money for both education and other state priorities, doesn't impact corporate income tax, and doesn't change property assessment rates. Unlike Amendment 73, Initiative #271 only requires 50% approval (a simple majority) threshold to pass.

Who's behind Fair Tax Colorado and Initiative #271?

Fair Tax Colorado is an effort that came out of the Vision 2020 Network, a network of organizations that have been working for the last few years to develop solutions to our unfair and inadequate tax code. Organizations who are part of Fair Tax Colorado include American Federation of Teachers, the Bell Policy Center, Colorado Education Association, Colorado People's Alliance, Colorado Fiscal Institute, Great Education Colorado, Together Colorado, and United New Economy.

How is this campaign being funded?

The campaign for Initiative #271 is a grassroots effort supported by contributions from individual organizations.

I volunteered to carry a petition. What now?

Thanks for being a Fair Tax Colorado volunteer! Although we didn't qualify for the 2020 ballot, we still would like to collect all of the petitions our volunteers carried. Please return them to the Denver Fair Tax Colorado office as soon as possible!