Dynamically change color to lighter or darker by percentage CSS (Javascript)

You can do this with CSS filters in all modern browsers (see the caniuse compatibility table).

.button {
  color: #ff0000;
}

/* note: 100% is baseline so 85% is slightly darker, 
   20% would be significantly darker */
.button:hover {
  filter: brightness(85%);
}

<button class="button">Foo lorem ipsum</button>

Here's more reading from CSS Tricks about the various filters you can use: https://css-tricks.com/almanac/properties/f/filter/

If you're using a stack which lets you use SASS, you can use the lighten function:

$linkcolour: #0000FF;

a {
  color: $linkcolour;
}

a.lighter {
  color: lighten($linkcolour, 50%);
}

There is "opacity" which will make the background shine through:

opacity: 0.5;

but I'm not sure this is what you mean. Define "reduce color": Make transparent? Or add white?