This article first appeared on December 17, 2025 in Complete Colorado.
If you think your income taxes are hard to prepare now, just wait.
Because if Initiative 181—the punitive (“progressive”) Colorado income tax ballot issue—passes at the polls, it will be worse. Much worse.
Just on its face, Initiative 181 is complex. But Initiative 181 also would trigger a special interest assault on the legislature, leading to far more tax complexity.
The background
Colorado currently imposes a flat rate of 4.40 percent on state taxable income. That seems simple, and it is. But it is the only simple thing about Colorado’s income tax code. The law is riddled with exemptions, deductions, and other intricacies. In recent years, the complexity has gone from bad to worse, because Colorado’s far-left politicians keep adding tax loopholes to benefit favored voting blocs and special interests.
But up to now, they haven’t been able to mess with the flat 4.40% rate. This is because the state constitution—specifically the Taxpayer’s Bill of Rights (TABOR)—says taxable income must be levied in a single bracket.
What the text of Initiative 181 would do
You can predict some of the damage from Initiative 181 just by reading its miserably-written text:
* It would amend the state constitution to strip away the protection of the single flat rate.
* With constitutional protection gone, it would re-write the tax code to make it more complicated, replacing the single bracket with ten new ones—five for individuals and five for corporations.
* The individual income tax brackets would range from 4.21% to 9.51%—far above that of any other state in the region and one of the steepest in the entire country. Moreover, there does not seem to be any protection from “bracket creep,” the insidious process whereby people’s tax rates rise relentlessly merely because they have kept up with inflation. Year after year, you would find yourself paying more and more of your income to the state.
* On the corporate side, Initiative 181 would jack up the marginal rate to 9.51%, the nation’s third highest. This is higher than corporate taxes in lefty states such as New York, Massachusetts, and California. What’s more, this burden would be imposed on even relatively small corporations—those earning more than $1 million a year.
* Initiative 181 would abolish your TABOR tax refunds for any additional money generated.
* It would send the extra funds to various social programs, most of which have a record of waste and corruption. Not a single dime would be spent to counter Colorado’s crime wave, retire our excessive debt, or repair our crumbling roads!
The special interest scramble
But there’s more than the text of this measure reveals. As I pointed out in a previous column, punitive (“progressive”) state income taxes have a documented record of discouraging investment and killing jobs. This is particularly so when a state hikes levies while other states are cutting them, as is happening now.
And because Initiative 181 would strip away constitutional protection and set the tax level so high, it would provoke a renewed scramble among special interests for political favors. This would make the tax code more complicated than ever.
Skeptical? Just imagine the pleas and demands:
“Family farms can’t survive a 9.51% corporate tax! They need a special exemption!”
“Health care is too expensive in Colorado already! Protect Coloradans’ access to health care by reducing the tax rate on providers!”
“Attract new physicians to Colorado! (or another profession—fill in the blank yourself). Give them a lower tax rate for the first five years they are here!”
“This new factory will create 5,000 well-paying Colorado jobs. But it won’t open unless it gets an income tax reduction.”
“Seniors who worked all their lives need help! Exempt them from high taxes when they sell appreciated assets!”
And this is just the beginning. The pleas and the demands will go on and on and on. The Colorado tax code will cease to be merely complicated and become a nightmare.
Admittedly, this will suit the Third World-style “progressive” politicos just fine. They’ll broker the corrupt political favors and preen themselves on their own virtue and importance while doing so.
But for the rest of us, it will be a disaster.