A coalition led by a Colorado think tank will file a ballot initiative on Wednesday to raise state income tax rates on annual household incomes and corporations with earnings above $500,000.

The ballot measure, which sets up a “graduated” income tax, would also provide a tax break for households with incomes below the $500,000 threshold.

Broadly speaking, under a graduated income tax — which is also known as “progressive” tax — the rates are divided into brackets. The lower brackets pay a smaller rate; the higher levels are taxed a bigger rate. A graduated system would eliminate Colorado’s flat tax rate.

Under the coalition’s proposal, the higher bracket would pay more so that even with the tax break for incomes below $500,000, the graduated system would still pull in a bigger net revenue for the state government.

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