What passed and failed in the recent Colorado election and what does this mean for residents, businesses, and real estate? A new governor, taxes, fentanyl, trans youth in sports, hunting, natural gas are among matters voters had a say on Tuesday.
Along with these issues are the battles of the century regarding the fate of your tax dollars with the elimination of the Taxpayer Bill of Rights (TABOR) and changes to income tax rates. Colorado now joins a club of 5 of highest income tax rates in the country. What are all the initiatives that passed and failed and how will it impact real estate and your wallet? Based on the election, where will Colorado fit into the new paradigm
Will Colorado turn further blue and how will this impact businesses?
Although Colorado has had Democratic Governors in the past. The election of Phil Weiser is a much harder shift left. He has already signaled an end to the labor peace act and many of the bills that Governor Polis vetoed will be swiftly approved with the Democratic super majority.
There was no doubt in this election that Colorado was blue, but the severe shift to the far left was unexpected. Colorado is going further left than California and Oregon with any caps on spending going out the window and increased taxes passing. Unfortunately these changes are not good for businesses or high income earners.
What are the most impactful laws that passed and failed in the Colorado Midterms?
The big three items I was watching on Tuesday was the elimination of Tabor, the graduated income tax, and the proposal to cap Colorado’s tax rate.
- The elimination of Taxpayer Bill of Rights [PASSED]
- By removing any education spending from the general budget: This initiative would grant the state the ability to spend another 4.6 billion under the guise of education spending and allow state government to grow exponentially with essentially no spending caps for the foreseeable future. Passing of this initiative eliminates future refunds and allow runaway spending
- The implementation of a graduated income tax [PASSED]
- A law that will move Colorado to a graduated income tax system in which high earners pay a higher tax rate, marking a big change in tax policy. For the last 40 years Colorado was a moderate in income tax rates with a flat 4.4% tax rate which led to huge growth in Colorado as it was a “moderate” tax state. With the passing of a top rate of 10% Colorado is now one of the most expensive tax states in the country.
- A cap on the state’s income tax rate [FAILED]
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- The opposition to the graduated income tax was an initiative to keep the 4.4% flat tax; this initiative failed to pass.
Will Colorado have higher taxes after the election?
Unfortunately looking at the ballot initiatives the underlying theme is more taxes and sadly there was not a single initiative to cut back on spending whatsoever. Above are the results of a survey I did a while back where I gauged readers on their opinion of increasing income taxes. The two biggest tax changes are:
- Elimination of Tabor under the guise of education spending: This is earth shattering. Tabor was created to Limit state revenue and spending growth to inflation plus population and also forces the state to get voter approval for tax increases. With the shell game of moving education out of the general budget, they are eliminating 4.6 billion in caps on spending
- Increased taxes on higher earners: This is a bit ironic, a handful of other states are lowering their income taxes and surrounding states like Utah has a flat tax similar to Colorado’s current 4.4% and Wyoming has no income tax.
Will the elimination of Tabor and higher income taxes “save” Colorado’s budget?
The entire premise of the increased taxes on high earners and the elimination of the taxpayer bill of right is to plug huge holes in Colorado’s budget. Unfortunately both of these initiatives will bring in far less revenue than anticipated and likely will result in a loss in revenue. Look at the chart above. In every single instance of “wealth taxes” the amount they bring in is considerably less than projected due to 3 key factors:
- Capital is mobile: It is important to note that capital is very mobile. For example a high net worth individual can easily move assets like trusts and companies to lower cost areas. We have seen this with every state that has gone after high earners with a flight of capital out.
- Individual exits: High earners will physically leave as a 10% top tax rate is substantially higher than almost every other state. Colorado now is the 5th highest tax rate in the country (behind Ca, NY, NJ, and HI). We are now ahead of Oregon which is one of the bluest in the country.
- Business exits: You will see a mass exodus of businesses along with less businesses relocating to Colorado. The high tax rates and business uncertainty will put a nail in the coffin for businesses in Colorado. These businesses will take employees with them.
A good example to highlight how this will play out in Colorado is what occurred in NY: New York City Revenue Shortfall: New York City missed out on an estimated $2.5 billion in annual personal income tax revenue due to the decline in its share of U.S. millionaires between 2010 and 2022.
It is also important to note that Colorado also has high sales taxes. For example in Steamboat the sales tax is 10%, couple this along with high property tax rates, and a new 10% top rate Colorado is no longer competitive to other states throughout the country.
Will Colorado residents and businesses leave because of Colorado’s election?
The recent Colorado election hyper charged the rush for the doors from businesses as taxes continue to increase and the regulatory burden to operate exceeds most other states in the country and all other mountain states.
Colorado used to be known for its picturesque mountains, healthy business climate and quality of life. Unfortunately, the cards have now changed with businesses and residents rushing to the exits as Colorado’s spending problems are now overshadowing quality of life factors. Look at the chart above, with the increased taxes, Colorado will now be in a club of ultra blue like Oregon, California, and Illinois, all of which are shedding residents and businesses.
The legislators and the voters of Colorado have not come to the realization that the root cause of budget issues is spending not revenue. Colorado continues to overspend on just about everything from Medicare, education, homelessness, etc… and is unable and unwilling to live within its means which is what has led to the surge in ballot initiatives to increase revenue.
Unfortunately, the graduated income tax and elimination of Tabor will ultimately lead to less tax revenue.
The irony is that we already had the solution to solve the self-inflicted crisis. Tabor was originally created to limit state spending to inflation + population growth. Tabor had been working fine since 92 but voters just eliminated the last check and balance on state spending.
Unfortunately, even with the increased taxes, Colorado will still have a budget problem and they likely created a larger budge problem as high earners and businesses rush for the doors.
Where can I learn more about Colorado’s midterm election results?
- https://www.denverpost.com/2026/08/09/colorado-ballot-measures-election-initiatives/?
- https://coloradohardmoney.com/colorado-joins-tax-increase-line/
- https://coloradohardmoney.com/socialist-wins-in-colorado-impact-on-colorado-real-estate-remote-workers/
- https://coloradohardmoney.com/colorado-snubbed-in-best-places-to-live-report/
- https://coloradohardmoney.com/should-colorado-double-the-income-tax-rate-survey-results/
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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…
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