Members of Governor’s Competitiveness Council break ranks to criticize tax proposal

Gov. Jared Polis is leaving a roadmap behind for state legislators and his successor on how to make Colorado’s economy, which has been sliding in the rankings since the pandemic, more competitive.

The Governor’s Competitiveness Council (GCC) unveiled 49 recommendations on Wednesday , including 19 legislative action steps, to help turn the state’s economy around.

Among the recommendations: Colorado should create a regulatory concierge for businesses, treat housing as essential infrastructure, simplify its sales and use tax system, and modernize its workforce pipeline.

But before the report dropped, 25 members of the council independently urged Colorado voters in an open letter to reject Amendment 87.

In doing so, they were addressing the elephant in the room that the official report — overseen by the Colorado Office of Economic Development and International Trade — could not touch because of state agency restrictions.

If the ballot measure passes, the higher tax rates it imposes on businesses and wealthy entrepreneurs would negate the benefits of any reforms the report recommends, the break-off group argued.

Amendment 87 seeks to generate an additional $2.7 billion a year in state revenues by moving Colorado from a flat 4.4% state income tax to a tiered system that tops out at 8.4% on individual and business incomes above $1 million. “For decades, Colorado’s relatively low, flat income tax has been an important part of the state’s economic identity and competitive advantage,” the open letter states. “Amendment 87 would discard that advantage and reverse a policy that has served Colorado well. The potential consequences–for investment, business formation, job creation, and economic growth—are too significant to ignore.”

Colorado has gone from a highly competitive state economically to more in the middle of the pack, which motivated Polis to form the council in July .

“We are Colorado, and the middle of the pack isn’t good enough for us,” Polis said. “We want to be in the top 10, and that will take deliberate effort.”

Polis also warns that if Amendment 87 passes, Colorado could drop to the bottom of the business rankings.

Supporters of Amendment 87 argue that the majority of individuals and businesses would see lower taxes. Given a projected state budget shortfall of $1.6 billion, additional revenues are needed to fund vital services.

“Every new dollar from 87 goes directly to childcare, healthcare, and K-12 schools, the same costs the Competitiveness Council’s own report calls economic infrastructure for Colorado’s workforce,” said Chris deGruy Kennedy, president and CEO of the Bell Policy Center and co-chair of the coalition backing Amendment 87.

Small businesses are closing and losing workers because they can’t afford rising costs, he said. The measure would lower their taxes while shifting the burden to large multinational corporations that can better afford it.

Only 30% of the additional revenues will come from businesses, and of that share, 93.5% will come from the largest corporations, Kennedy said, citing a study from the Institute on Taxation and Economic Policy. Polis countered with estimates that more than 70% of the additional revenues will come from higher taxes on businesses, which he argues would dampen job creation and hinder efforts to recruit and retain employers.

With Colorado already perceived as having become less business-friendly, lifting state income tax rates would send the wrong message, he warned.

The GCC held seven listening sessions across the state and took feedback from 490 mostly small-business participants, as well as analysis from the University of Colorado Boulder’s Leeds School of Business, to come up with the recommendations in its 46-page report.

Even if half are adopted, the state will find itself in a much better place competitively — provided voters don’t approve a tiered state income tax, Polis said.

Because the Colorado Office of Economic Development and International Trade, which guided the review, isn’t allowed to take a political position, the report didn’t address Amendment 87.

But the group that split off to issue their own letter believed the most immediate threat to the state’s business climate was coming up in November.

Their letter noted that when Colorado switched to a flat 5% income tax rate in 1987, it became the first state to abandon a graduated tax system. More have done so since then.

State residents make $4,600 more a year per capita than they would have if the state had stayed with a graduated tax, according to a study from the Cato Institute cited in the letter. Surrendering that advantage is the wrong move to make at a time when Colorado is generating fewer jobs and having a harder time attracting companies, the breakaway group argues.

The GCC reports details the downward trend underway. Colorado’s economy, measured over the past 15 years, was the fourth fastest growing in the country. This year, its GDP growth slowed to 17th place. Even more concerning, private sector employment contracted in 2025, pushing Colorado near the bottom for job creation. The state’s labor force also shrank by 81,000 people between October 2024 and June 2026, another troubling trend.

Some of that reflects more retirees, but reduced migration is also at play. Colorado, once a top destination for people relocating, now ranks 41st, according to a study from Consumer Affairs .

A lack of affordability, especially in housing, is a key deterrent from people moving to and staying in the state. The state ranks near the bottom, 47th, when it comes to affordability.

Colorado still has a full pipeline of companies applying for relocation incentives, but it has been losing out increasingly to states with a more streamlined regulatory and permitting process, like Texas, Arizona and Utah, the GCC report noted.

“State leaders must commit to comprehensive actions that will restore Colorado’s reputation as a leading state that is welcoming to business and innovation,” the report urges.

Among the problems highlighted by businesses in the state are overlapping regulations, fragmented permitting processes, inconsistent interpretation, and constant policy changes that make it hard to plan, which one panel participant described as “death by 1,000 paper cuts.”

One recommendation is to have a regulatory concierge who can help businesses navigate the process. Another is to have an accessible and comprehensive database of available site locations.

Long known as an innovation hub, Colorado is seeing fewer startups and more of those startups leaving the state to grow into larger companies, said Seth Levine, a partner at the Boulder venture capital firm Foundry who was a member of the commission and and the lead signer of the open letter.