Colorado’s Progressive Tax Push Meets Texas’ Fiscal Fortress: A Tale of Two Ballots

The National Battle Over State Tax Policy Comes to November Ballots

While national political attention often focuses on congressional races and presidential politics, some of the most significant fiscal policy battles are playing out at the state level this November. In Colorado and Texas, voters will decide ballot measures that represent fundamentally different visions for taxation and government spending—offering a microcosm of the broader national debate about the proper role and size of government., according to market trends

The National Battle Over State Tax Policy Comes to November Ballots
Colorado’s Dual Tax Measures: Expanding Pandemic-Era Benefits
The Hidden Tax Expansion: Bracket Creep Concerns
Texas’ Tax Limitation Agenda: Building Fiscal Firewalls
Broader Implications for State Fiscal Policy
The National Context: State Laboratories of Democracy

These competing approaches reflect the deepening ideological divide between states governed by Democratic and Republican majorities. What happens in these two states could signal emerging trends in state-level fiscal policy and potentially influence similar measures in other states in coming years.

Colorado’s Dual Tax Measures: Expanding Pandemic-Era Benefits

Colorado voters face two significant tax measures this November that seek to make temporary pandemic-era spending programs permanent. Propositions LL and MM, referred to the ballot by the state’s Democratic-controlled legislature, would expand tax increases originally approved in 2022 and remove constitutional spending limits on the resulting revenue., according to additional coverage

The measures build upon Proposition FF, which voters passed in 2022 to fund universal school lunches for all public school students regardless of household income. That measure raised taxes by limiting itemized deductions for higher-income Coloradans—specifically those earning over $300,000 annually., according to further reading

Proposition MM would further tighten these deduction caps, reducing them from $16,000 to $2,000 for joint filers and from $12,000 to $1,000 for single filers. This additional tax increase is projected to generate approximately $95 million annually on top of the revenue already being collected through Proposition FF., according to related news

Proposition LL addresses a different aspect of the funding mechanism—the state’s Taxpayer’s Bill of Rights (TABOR), which requires excess tax collections to be refunded to taxpayers. Because Proposition FF has generated more revenue than initially projected ($112 million collected versus $100.7 million estimated), Proposition LL would exempt the school lunch program from TABOR requirements, allowing the state to retain and spend these excess funds., according to market insights

The Hidden Tax Expansion: Bracket Creep Concerns

Critics of the Colorado measures point to what they describe as “bracket creep”—the phenomenon where inflation pushes more taxpayers into higher tax brackets over time, even if their real purchasing power hasn’t increased., according to market developments

Because the $300,000 income threshold for the deduction caps isn’t indexed for inflation, an increasing number of Colorado households will become subject to these limits each year. Analysis from the Independence Institute suggests that within ten years, taxpayers earning $300,000 will have the equivalent purchasing power of approximately $190,000 in today’s dollars, assuming historical inflation and income growth patterns.

“They sell it as a tax on the wealthy, but every year, more working Coloradans will get swept into the net,” noted Nash Herman of the Independence Institute, highlighting concerns about the measures’ long-term impact on middle-class taxpayers.

Texas’ Tax Limitation Agenda: Building Fiscal Firewalls

While Colorado considers expanding tax capacity, Texas voters will decide on multiple measures designed to limit taxation and spending. The Republican-led legislature has referred 17 propositions to the November ballot, many of which would constitutionally prohibit specific forms of taxation that have been proposed in other states.

Proposition 2 would explicitly prohibit a state capital gains tax, building upon Texas’ existing constitutional ban on income taxes. As Ballotpedia documents, this measure would close what some see as a potential loophole in the state’s tax limitations.

Proposition 6 would ban financial transaction taxes in Texas, preventing the imposition of taxes on stock trades and other securities transactions. Such taxes have been proposed in several progressive states and at the federal level, making Texas’ preemptive prohibition significant. The constitutional amendment would position Texas as a financial transaction tax-free zone.

Proposition 8 would constitutionally prohibit estate taxes, sometimes called “death taxes,” ensuring that wealth transfers between generations remain free from state taxation. The measure represents another layer of protection against forms of taxation that Republicans have traditionally opposed.

Broader Implications for State Fiscal Policy

The contrasting approaches in Colorado and Texas reflect broader national trends in state-level governance. Democratic-led states have increasingly turned to progressive taxation to fund expanded social programs, while Republican-led states have focused on limiting government revenue collection and spending.

These ballot measures also represent different philosophies about the role of direct democracy in fiscal policy. Colorado’s measures ask voters to approve specific tax increases for specific programs, while Texas’ measures ask voters to impose constitutional limitations on what future legislatures might do.

The outcomes in November will be closely watched by policy makers in other states considering similar measures. If Colorado voters approve the tax increases despite inflation concerns, it could encourage similar efforts in other Democratic-controlled states. Conversely, if Texas voters overwhelmingly approve the new tax limitations, it might inspire similar constitutional amendments in other Republican-led states.

The National Context: State Laboratories of Democracy

These state-level battles occur against a backdrop of ongoing debates about the proper balance between taxation and services, and between government authority and taxpayer protections. The divergent paths taken by Colorado and Texas represent what Justice Louis Brandeis famously called “laboratories of democracy”—states experimenting with different approaches to governance.

What makes these particular ballot measures especially significant is their permanence. Constitutional amendments in Texas and statutory changes with TABOR exemptions in Colorado are difficult to reverse, meaning November’s decisions could lock in fiscal policies for years to come., as related article

As voters in both states consider these measures, they’re effectively deciding not just on specific tax policies, but on fundamental questions about the role of government in providing services and the appropriate limits on state taxation authority. The results will provide valuable insights into voter sentiment on these crucial issues heading into the 2026 election cycle.