DENVER – As Westminster Democrat Rep. Lorena Garcia was recently rallying volunteers for an 11th-hour signature gathering effort to put a graduated income tax (Initiative 195) on Colorado’s November ballot, what she failed to mention is that majority Democrats in the state legislature have already put in place fees over the past few years that add up to more than triple the current income tax rate.
Although the big message in support of the progressive tax rates in Initiative 195 is that Colorado’s flat income-tax rate is among the lowest in the country, what isn’t being said, according to a recent Common Sense Institute study, is that “if all of Colorado’s fee enterprises were instead funded by the state income tax, it would have to rise to 14.22% to generate the same amount of revenue collected in 2025.”
The July report notes that even if higher education fee enterprises were excluded, the Colorado income tax would still have to increase to 7.97 percent, a whopping 81% more than the current rate of 4.4 percent. “Since 2018, voters have approved three income tax cuts, totaling a .38 percentage-point reduction,” says the study, in part. “During that same period, fee-based revenue from non–higher education enterprises has increased by an amount equivalent to a 1.8 percentage-point increase in the state income tax.”
“CSI’s report does a great job of showing how the state government has continued to try to circumvent Colorado voters,” said Nash Herman, fiscal policy analyst for the Independence Institute, adding the report only highlights a portion of the problem with Colorado’s tax system. “From 2001 to 2020, Coloradans’ average effective tax rate for state and local taxes increased form 6.57 percent to 8.3 percent of income, according to the Colorado Department of Revenue.”
And that increase occurred before accounting for fees and the increase in enterprise funds since 2020, Herman said.
Some of the key findings in the Common Sense report include:
- Just since 2020, the legislature has directly established ten new enterprises, which together have generated a total of $98 million since their inception.
- Total fees increased from $25.8 billion in FY24 to $28.2 billion in FY25, representing approximately 9.6% growth, driven by continued gains across fee categories.
- Since 2018, voters have approved three income tax cuts worth a combined reduction of .38 of a percentage point. Over the same period, fee-based revenue to non–higher education enterprises has increased by an amount equivalent to a 1.8 percentage-point increase in the state income tax.
Pushing the progressive tax
At the July pro-progressive tax rally, Rep. Garcia threatened signature gathering troops with the near devastation of Colorado that she said lawmakers will only be able to avoid if 195 is put on the ballot and it passes.
If “you don’t want families to suffer, you don’t want schools and teachers to not get paid, you don’t want childcare centers to shut down, you don’t want more cuts to Medicaid — then you will support the graduated income tax,” she said according to a Colorado Newsline story.
If passed, Initiative 195 would raise the current flat tax rate of 4.4 percent for everyone to 7.4 percent for those earning more than $500,000, increasing that amount as income earnings rise, with the top rate at 8.4 percent for those earning more than $1 million. The other 97 percent of Colorado taxpayers might see a slight income tax reduction, but would eventually get caught up in the graduated brackets if they move up the economic ladder.
In order to make the ballot, the measure needs gather signatures equal to 2 percent of the number of registered voters in each of the state’s 35 Senate districts by Aug. 3.
Herman said the tax burden was already climbing even as the population grew and the economy expanded.
“Layering rapidly rising fee revenue on top of that makes the overall fiscal situation concerning for Colorado taxpayers,” Herman said.
Other findings by Common Sense:
- By 2020, lawmakers had created 24 enterprises, which together collected $20.9 billion of revenue in that year. Just five years later, that total had grown to more than $28.2 billion.
- Between 2008 and 2025, TABOR-exempt revenue collected by enterprises per Colorado resident more than tripled and fee revenue grew substantially faster than General Fund revenue.
- In 2000, enterprises collected $225 per Coloradan, while the General Fund received $1,209. By 2025, these amounts had risen to $4,692 and $2,360, respectively. Since 2008, fee revenue per Coloradan has increased by $3.21 for every $1 increase in General Fund revenue per Coloradan.

