Engage Colorado - Correlation Is Not Causation

Newsletter — Issue 49 — Tuesday, September 22, 2026

This newsletter has been published by Engage Colorado.

The Thirty-One State Scoreboard

Correlation Is Not Causation

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.

This series has made the case that passing Amendment 87 — replacing Colorado's 4.4% flat income tax with six brackets topping out at 8.4% — would be bad for all Coloradans, because the innovators, companies, and capital that fund our schools, our hospitals, and our children's careers would build somewhere else.

The evidence I offered was the pattern across the states. The states with no income tax and the states that recently cut theirs are gaining people and income. The states with the highest graduated rates are losing both. In a single year California lost $12.9 billion in adjusted gross income and 209,000 residents on net, and New York lost $10.6 billion and 164,000, while Florida gained $20.6 billion and Texas gained $5.3 billion and 111,000 residents. Amendment 87 would put Colorado in the first group.

All of that is correlation. Correlation is not causation, which leaves three possible answers:

Let's dig deeper and see what we find.

The States That Actually Compete

Not every state competes for technology companies and large corporate employers. A company deciding where to place hundreds of engineers, a manufacturing facility, or a headquarters, needs a metro area deep enough to supply the workforce — and that narrows the field before policy enters the picture at all.

The starting criterion was simple: does the state contain a metropolitan area of at least one million people, as of 2015?

Three adjustments followed, each made on what a state is rather than on how it performed.

That leaves these thirty-one states. These states were excluded: Alaska, Arkansas, Delaware, Hawaii, Iowa, Kansas, Kentucky, Louisiana, Maine, Mississippi, Montana, Nebraska, New Hampshire, New Mexico, North Dakota, South Dakota, Vermont, West Virginia, and Wyoming.

The Five Factors

Each of these factors is an indication of whether the state has positive or negative momentum. Each is measured as a rate of change or per resident, so that size alone decides nothing.

The Method

1. Rank each state 1 through 31 on each factor. Best gets a 1.

2. Average the five ranks, with each factor weighted equally. That average is the score, and lower is better. Colorado's five ranks were 10, 13, 8, 8, and 12 — an average of 10.2.

3. Keep policy out of the ranking entirely. No tax rate, no regulatory measure, and no political variable touched the states chosen, the factors, or the weights. We ranked on results first, and only afterward asked what those results lined up with.

Where the 31 Landed

Causation?

What can be concluded from this assessment?

Factor one was income tax rates. Across these thirty-one states, the top marginal rate accounts for about 21 percent of the variation in these rankings.

The second was climate. Warm states average 13.1 on this scoreboard against 18.7 for cold states, accounting for about 24 percent of the variation. Slightly stronger than taxes.

The third was which party controls the state government. We divided the thirty-one states as follows.

Which party controls a state government accounts for about 22 percent of the variation across all thirty-one states.

Republican Versus Democratic Trifecta

Setting aside the seven states with divided government and comparing the twelve Republican trifectas directly against the twelve Democratic trifectas, the 22 percent rises to 31 percent — making party control the strongest of the factors considered, ahead of both taxes and climate.

Only recently — in 2019 — did Colorado transition from a divided government to a Democratic trifecta state.

Is That Meaningful?

Is a fifth to a third meaningful? For a single variable predicting something as complicated as a state's economy, yes.

Social science uses a standard convention for judging the strength of a relationship: 0.1 is small, 0.3 is medium, 0.5 is large. Income tax rates and climate come in at roughly 0.46 and 0.49 — approaching large. Party control, compared directly across the twenty-four states with unified government, comes in at 0.56. Past the threshold, in the range social scientists call a large effect.

These are also statistically solid. Each lands at odds of roughly one in a hundred or better against chance. With thirty-one states, relationships this consistent are very unlikely to be coincidence.

I Am a Pro-Colorado Independent

I am not making a case to vote Republican. I am an Independent. My motivation is Colorado. I believe that a vibrant tech and business ecosystem is vital to the well-being of all Coloradans.

A Democratic-led state can support policies that attract and retain innovators, companies, and the capital that follows them. Governor Polis has called a graduated income tax devastating to Colorado's economy, and he has added his name to the open letter opposing Amendment 87. Colorado and Washington are both under unified Democratic control, and both sit in the upper half of this scoreboard — though I note from prior work that both are losing momentum.

What separates the top of this list from the bottom is the choices a state makes. Either party can make them.

Back to the Question

Will passing Amendment 87 hurt Colorado?

Two of the three factors — tax rates and who governs — each line up with a fifth to a third of what separates the top of this scoreboard from the bottom, and each at odds of roughly one in a hundred or better against chance.

On this evidence, the policies adopted by Republican trifecta and divided government states are proving more effective at attracting economic activity than those adopted by Democratic trifecta states.

Colorado needs to define its own destiny. It can be a Democrat-led state and adopt policies that attract and retain the innovators, the companies they build, and the capital that follows them — the activity that funds our schools, our hospitals, and our children's futures. But if it continues to follow in the footsteps of California and other Democratic trifecta states, the downward economic slide will continue.

Your Vote and Your Signature

Please join in and protect Colorado's future by voting no on Amendment 87.

Please also sign the Open Letter — addressed to Attorney General Weiser, Senator Bennet, Senator Hickenlooper, and Mayor Johnston — asking that they support Proposition 136 and oppose Amendment 87. Governor Polis has already signed it.

More than 195 Colorado technology, business, and civic leaders have added their names.

Read it. Sign it. Then send it to three people who should sign it too.

Ballots drop October 2.

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.

But to have a realistic chance of achieving this vision, we must defeat Amendment 87.

Go Deeper

— Dan Caruso, Engage Colorado

Managing Director of Caruso Ventures, Host of The Bear Roars Podcast, and Board Chair of Tulagi Music Fest