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From Colorado's Proposed Tax Hike Could Alter State Economic Competitiveness

How could Colorado's tax hike reducing competitiveness affect Texas?

Possible What happens if… A possibility worth considering, not a forecast.

Texas may benefit from increased investment and talent migration from Colorado. If Amendment 87 passes, Colorado's top income-tax rate would nearly double from 4.4% to 8.4%, placing it alongside states like New York and California. This increase would take nearly $2.7 billion out of Colorado’s private economy each year and is expected to worsen the state's outlook on economic competitiveness, according to nine in ten Colorado executives. Because Texas has no income tax, this shift in relative tax burden could make Texas a more attractive destination for businesses, investment, and skilled workers leaving Colorado.

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How it reaches Texas

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The facts so far

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  • Amendment 87 would nearly double Colorado’s top income-tax rate, from 4.4% to 8.4%.gazette.com
  • Nine in 10 Colorado executives said Amendment 87 would somewhat or significantly worsen Colorado’s outlook on economic competitiveness.gazette.com
  • The measure would take nearly $2.7 billion out of Colorado’s private economy each year.gazette.com
  • Texas, Wyoming, and Nevada have no income tax at all.gazette.com
  • Colorado already ranks sixth worst in the nation for business migration.gazette.com

Why it matters

For Texas, which competes directly with Colorado for businesses, investment, and talent, a significant reduction in Colorado's economic competitiveness could translate into a net gain of resources. The state's zero income tax environment is a key competitive advantage, and if neighboring states become significantly less attractive due to tax policy, Texas could see increased migration and business relocation.

This dynamic is part of a broader national trend where capital and skilled workers are highly mobile. The reports note that over the past half-century, 30 states have cut their top income-tax rates, and the number of states with flat income taxes has tripled, indicating a national shift away from graduated tax structures.

What we don't know yet

  • How many businesses or individuals are currently considering moving out of Colorado?
  • How quickly would a change in Colorado's tax environment translate into measurable migration to Texas?

What would change this answer

Colorado passes Amendment 87The effect would become more certain and stronger, as the tax increase would be implemented, immediately changing the state's tax profile.
Colorado's Governor's Competitiveness Council framework gains tractionThe effect would fade, as the state would be actively implementing pro-growth strategies designed to counteract the negative impact of the tax increase.

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Brind's analysis is written by AI from the reporting linked above and can be wrong. This explainer is a possibility worth considering, not a forecast: steps marked as Brind's reasoning are not stated in the reporting. It is not investment advice; do your own research.