Instead of cutting bloat from the Colorado Government there is a new proposal to help the state spend even more by doubling the state income tax rate on “wealthy taxpayers”. The theory is who doesn’t want free money; someone else is going to pay. What is the new ballot initiative to double the state income tax? What can we learn from other states? (hint it is not pretty :<).
What is the new tax proposal in Colorado?
The new ballot measure would end Colorado’s decades-old flat income tax policy and require those making more money to pay higher rates. Below is the proposal for the new tax rates. Note currently there is a 4.4% flat tax so the savings will be nominal for most, but huge jumps for many. People making $1 million a year would pay almost $18,000 more, with the rate steadily increasing until those making $10 million per year paying some $476,000 more in state income taxes.
- $100,000 or less: 4.2%
- $250,000: 4.3%
- $500,000: 4.4%
- $700,000: 5.3%
- $1 million: 6.2%
- $1.5 million: 7.3%
- $3 million: 8.4%
- $5 million: 8.8%
- $10 million-plus: 9.2%
How much revenue will the new Colorado tax measure raise?
The changes would raise another $2.3 billion per year for the state, according to an analysis by the initiative’s backers. They would also include breaking a key piece of the Taxpayers’ Bill of Rights, or TABOR, the longstanding state constitutional amendment that governs state tax policy.
Unfortunately the math doesn’t add up in real life. Let’s look at what happened in NY that also implemented a wealth tax.
What happens when Colorado taxes high earners?
It doesn’t take a rocket scientist to figure out that someone making over a million is a smart person and will take steps to minimize their tax liabilities. We can look no further than NY that implemented huge increases in “wealth taxes”. Here is what happened:
New York state had a net loss of $14 billion in net adjusted income due to taxpayers leaving between 2021 and 2022, according to the Tax Foundation and IRS data. The city’s revenue from personal income taxes declined between 2022 and 2024, from $16.7 billion in 2022 to $14 billion last year
Colorado High earners spend big to minimize tax payments
There are huge economic incentives to minimize taxes. For example, let’s say someone makes 1 million in Colorado, they would face a 92k tax bill. With a hop skip and jump they could buy a property in Wyoming and instantly save 92k a year and on top of that have lower property taxes and less government regulation.
This isn’t just theoretical. Let’s see what has happened in real life. Not only are high earners flat out leaving, but they are also minimizing their time in NY to make certain they don’t fall into a huge tax trap. Here is a quick excerpt from a Bloomberg article.
When it comes to taxes and the wealthy, every minute matters — especially for those who have left New York and declared residency elsewhere. At a time more high earners are departing, or at least are claiming to, state officials are stepping up already-intense scrutiny to make sure former residents have actually moved. It’s a complex operation that involves cutting-edge artificial intelligence and tracking everything from travel to the location of people’s pets.
For the ultrarich, even just an extra day in the wrong place could mean millions in income-tax liability. This is not just happening in NY, when Washington state inacted huge jumps in income taxes, its wealthiest resident, Jeff Bezos the founder of Amazon, packed up for Florida and is relocating offices to Tennessee costing Washington state billions in tax revenue.
Taxing rich will backfire on Colorado
NY, Washington, and California are a posterchild for what happens. The numbers do not lie, the “tax the rich scheme” ultimately led to millions of dollars of lost revenue as high net worth earners migrated to other locations that were cheaper. The same will occur in Colorado at an expedited rate as Denver does not have the same draw as NY city, someone would quickly substitute Denver for Salt Lake City or Boise or Bozeman for savings of hundreds of thousands a year.
We are already seeing a compression in real estate prices as out migration picks up due to the cost of living and extreme governmental policies.
Colorado should do the opposite of raising taxes
Colorado should be doing just the opposite of attacking the wealthy and instead embrace them. Someone who makes 10 million a year already pays 440k a year in taxes and they use very little services. It is not like they are on food stamps or requiring housing assistance. They are out buying a sports car, going to high end ski resorts, etc… and giving even more money to local governments through sales taxes and property taxes.
Furthermore competing states are largely moving in the opposite direction. In the past five years, most state legislatures have enacted income tax cuts and the number of states with a flat income tax has nearly doubled over the past decade.
“Six of those flat taxes have already been implemented, while two others are set to take effect in the future,” added Walczak. “Specifically, Arizona enacted a flat tax law in July 2021, followed by Iowa in March 2022, Mississippi and Georgia in April 2022, and Idaho in September 2022. Louisiana joined them in December 2024, followed by legislation adopted in Kansas in April 2025 and Ohio in June 2025.”
Continued bad policies in Colorado driving businesses elsewhere
Think if you were the CEO of a fortune 500 Company. With all the laws and additional taxes why would anyone choose Denver over our neighbors that are much more business friendly, have similar quality of life, and have much lower taxes. If a CEO made 10 million dollars a year they would pay 500k more in taxes in Colorado than Salt lake city every single year!
Unfortunately the recent trend in Colorado has been continued “tax and spend” as opposed to living within our means and focusing on efficiency. This strategy will continue to backfire as high-net-worth individuals leave and businesses locate elsewhere.
The crazy part is even Governor Polis has come out against the tax the wealthy strategy, but it seems to be failing to resonate throughout the state. Unfortunately, with the Colorado Electorate skewing very far left it is a crapshoot if this will pass or not. Stay tuned to see how this plays out at the ballot box but regardless of the outcome the damage is likely already done with business leaders opting for other locations and high net worth earners already planning moves to neighboring states.
Additional Reading/Resources:
- https://www.nysscpa.org/news/publications/the-trusted-professional/article/high-earners-in-new-york-go-to-great-lengths-not-to-get-taxed-as-residents-041924
- https://www.cnbc.com/2025/07/17/new-york-city-braces-for-wealth-flight-with-mamdanis-political-rise.html
- https://www.bloomberg.com/news/features/2024-04-19/how-to-avoid-state-taxes-new-york-rich-use-private-jets
- https://www.denverpost.com/2025/09/03/colorado-income-tax-increase-ballot-measure/
- https://tsscolorado.com/for-third-time-state-board-approves-ballot-title-for-progressive-income-tax/
- https://coloradohardmoney.com/lakewood-defeats-upzoning/
- https://coloradohardmoney.com/denver-surpasses-tampa-with-fastest-falling-prices-is-the-sky-falling/
We are a Colorado Private/ Hard Money Lender funding in cash!
If you were forwarded this message, please subscribe to our newsletter
I need your help as my goal in writing these articles is to provide the best information/insight on Colorado Real Estate that you cannot get anywhere else! Please like and share my articles on linked in, twitter, facebook, and other social media and forward to your friends/associates 😊 I would greatly appreciate it.
Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. He is the owner of Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Glen resides in Colorado, lends in Colorado, owns property in Colorado, and services loans in Colorado which provides a unique real estate prospective of what is actually happening on the ground both in Denver and throughout Colorado. My goal of this real estate blog is to provide an honest assessment of what I see happening in Colorado real estate and how it will impact real estate owners, buyers, realtors, mortgage professionals, etc…
Fairview is the recognized leader in Colorado Hard Money and Colorado private lending focusing on residential investment properties and commercial properties both in Denver and throughout the state. We are the Colorado experts having closed thousands of loans throughout the Front range, Western slope, resort communities, and everywhere in between. We also live, work, and play in the mountains throughout Colorado and understand the intricacies of each market.
When you call you will speak directly to the decision makers and get an honest answer quickly. We are recognized in the industry as the leader in Colorado hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games). Learn how to find a reputable hard money lender and why Fairview is the best hard money lender for investors.
Tags: Denver hard money, Denver Colorado hard money lender, Colorado hard money, Colorado private lender, Denver private lender, Colorado ski lender, Colorado real estate trends, Colorado real estate prices, Private real estate loans, Hard money loans, Private real estate mortgage, Hard money mortgage lender, Hard money mortgage lender, residential hard money loans, commercial hard money loans, private mortgage lender, Hard Money Lender, Private lender, private real estate lender, residential hard money lender, commercial hard money lender, No doc real estate lender