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Newsletter — Issue 47 — Thursday, September 10, 2026
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This newsletter has been published by Engage Colorado.
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Initiative 232
Let's Be Smarter, Not Dumber
That is Initiative 232
This Engage Colorado Newsletter reflects the personal opinions of Dan Caruso, written with the support of the Caruso Ventures team. The Ensuring Colorado's Innovation Future Coalition did not review and has not endorsed this Engage Colorado Newsletter.
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This November, Colorado voters will answer two conflicting questions about the state's income tax.
Initiative 232 asks whether to cap Colorado's income tax rate at 4.4% and keep it there. Initiative 195 is the exact opposite — it asks whether to replace that flat 4.4% rate with six brackets running from 3.7% to 8.4%.
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Two measures, one ballot
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Initiative 232
4.4% flat
Caps the rate where it is today — and keeps it there
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Initiative 195
3.7% – 8.4%
Replaces the flat rate with six graduated brackets
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If Colorado passes Initiative 232 and rejects Initiative 195, a gigantic first step will have been taken toward reestablishing Colorado's reputation as a state that wants entrepreneurs, companies, and investors to build their futures here.
This benefits every Coloradan, and most of all the generations that follow us. They are the ones who will have the careers worth building — because the jobs, the companies, and the economic activity that create those careers will still be here.
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What Initiative 232 Does
Initiative 232 caps the individual and corporate income tax rate at 4.4% — the rate Coloradans pay today. It changes state law rather than the constitution, and it passes with a simple majority.
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The Evidence: A Flat Tax Benefits the People Who Live Here
The states winning this competition and the states losing it are separated by their income tax policy more cleanly than by almost anything else in American economic data.
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Eight states levy no income tax at all
Texas · Florida · Tennessee · Nevada · Wyoming · South Dakota · Alaska · New Hampshire
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Five more have cut their rates recently. Arizona replaced its graduated system with a 2.5% flat rate in 2023, the lowest rate of any state that taxes income. North Carolina dropped its flat rate to 3.99% this year. Georgia cut to 5.19%. Utah went to 4.5%. Idaho to 5.3%.
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Five more cut theirs — rate now
Arizona
Replaced a graduated system with a flat rate in 2023 — the lowest of any state that taxes income
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2.5% |
North Carolina
Dropped its flat rate this year
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3.99% |
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Georgia
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5.19% |
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Utah
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4.5% |
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Idaho
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5.3% |
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Colorado today
The rate Coloradans pay now — and the rate Initiative 232 would cap
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4.4% flat |
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The states with the highest graduated rates are the states people are leaving. California's top rate is 13.3%. New York's is 10.9%. New Jersey's is 10.75%. Massachusetts voters added a 4% surtax on income above $1 million in 2022, lifting its top rate to 9%. Washington had no income tax until, in March of this year, it enacted a 9.9% tax on household income above $1 million, effective January 2028.
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Top graduated rate
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13.3%
California
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10.9%
New York
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10.75%
New Jersey
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The most recent IRS migration data shows California losing $12.9 billion in adjusted gross income in a single year, New York $10.6 billion, Massachusetts $4.2 billion, and New Jersey $2.8 billion. California lost 209,000 residents on net; New York 164,000.
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Departures — adjusted gross income and residents lost in a single year
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▼ AGI |
▼ Residents |
| California |
$12.9B |
209,000 |
| New York |
$10.6B |
164,000 |
| Massachusetts |
$4.2B |
30,000 |
| New Jersey |
$2.8B |
32,000 |
| Washington |
$549M |
2,328 |
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Illinois is on that list too, losing $6.1 billion — and it belongs there for a different reason. Its rate is flat at 4.95% — the Illinois constitution requires it. In November 2020, Illinois voters were asked almost exactly what Coloradans are being asked, a constitutional amendment replacing the flat rate with graduated brackets topping out at 7.99%.
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Illinois, November 2020
The same question Coloradans are being asked. They rejected it.
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53%
Voted no — kept the flat rate
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47%
Voted yes — graduated brackets to 7.99%
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My beloved home state may yet drive the Bears to Indiana, but at least they got this vote. Right?
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The money went where the rates are low. Texas added 111,000 residents on net, North Carolina 69,000, and South Carolina 59,000.
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Destinations — adjusted gross income and residents gained
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▲ AGI |
▲ Residents |
| Florida |
$20.6B |
114,000 |
| Texas |
$5.3B |
111,000 |
| South Carolina |
$4.1B |
59,000 |
| North Carolina |
$3.9B |
69,000 |
| Tennessee |
$2.7B |
43,000 |
| Arizona |
$2.7B |
27,000 |
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Initiative 232 Tells Innovators That Colorado Wants Them
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A yes on Initiative 232
Would send a loud signal that Colorado belongs in the first group — the states that are attracting innovators, companies, and capital.
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A yes on Initiative 195
Would send a message that Colorado should be grouped with California, New York, and New Jersey — the states that are driving innovation away.
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If Both Pass
Colorado law says that when two approved measures conflict, the one receiving the greatest number of yes votes prevails.
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What Comes Next
The next issue carries my proposal for how Colorado's tech and business community coalesces around a common message — in support of Initiative 232, in opposition to Initiative 195 — and how we take that message to our political leaders together.
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If We Work Together, the Sky's the Limit
Colorado can be the most attractive innovation ecosystem in the world, and every Coloradan will share in the economic and cultural prosperity that results from being the world's leading geography for innovation. This is the Innovation Vision for Colorado.
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