I keep a short list of dates that actually move money, and this November just elbowed its way onto it. Not because of a national slogan, and not because a single headline can settle a decade of tax fights. Because three very different states are about to ask ordinary voters a question that high earners usually settle with lawyers, accountants, and a moving truck. Raise the bill. Cap it. Or kill the idea before the first payment is due. If you earn well, own a business, or simply live in a place that has been quietly recruiting your neighbors, the ballots are no longer background noise.
What strikes me, reading the proposals side by side, is how little they resemble one another. One is a one-time bite on extreme net worth. One swaps a simple flat rate for a ladder that climbs as income climbs. One tries to erase a millionaire levy that has not even started collecting yet, and to lock the door behind it. Same month. Same broad argument about who should pay. Completely different mechanics. That mismatch is where the real planning lives.
Why These November Ballots Matter More Than the Headlines
The K-shaped economy is not a theory you need a seminar to understand. Some households watched asset prices and bonuses recover fast. Others are still negotiating grocery bills and rent. That split has given populist arguments fresh oxygen, especially in states run by Democrats, where the phrase fair share shows up in campaign mail the way interest rates used to show up in bank ads. At the same time, states are competing harder for mobile income. Cut the rate, freeze it, or scrap it, and you might pull a founder, a medical practice, or a family office across a border.
Tax policy researchers have been pointing at the same pattern for a few years. State income taxes used to cluster around a middle rate, something near 6 percent, boring and predictable. That middle has thinned. Some states keep cutting. Others add surcharges aimed at the top. High earners are living in the gap between those two strategies, and November is when the gap gets a vote.
I have found that people underestimate ballot measures because they feel local. They are local. They are also portable. A founder who can work from anywhere does not experience a state surcharge as a civic debate. She experiences it as a line item next to housing, schools, and flight time to the office she still keeps. Perhaps the most interesting aspect of this cycle is that the measures point in opposite directions. Voters are not marching in one column. They are being asked to choose between extraction and attraction, sometimes in the same news cycle.
A tax vote is never only about the rate. It is about whether the people who can leave believe the state still wants them to stay.
State tax adviser, speaking off the record after a client meeting
Massachusetts already ran a version of this experiment. An extra 4 percent on income above $1 million passed in 2022. Collections have beaten early forecasts, with more than $3 billion arriving in the 2025-2026 fiscal year. That is the part supporters quote. The other part is uglier for anyone who models residency. A review of federal filing data by a Boston policy institute found the state lost more than $4 billion in adjusted gross income in 2023 from high earners who left. Revenue up. Reported income base thinner. Both can be true, and both should make a planner nervous.
Rhode Island joined the club this summer with a phased 3 percent surcharge on income above $1 million, pushing the top rate toward 8.99 percent by 2029. New York’s levy on expensive second homes is tied up in fresh legal fights, including claims that notice was botched and that the tax itself fails a constitutional test. None of that is on the November ballot. All of it sits in the background while California, Colorado, and Washington ask voters to pick a side.
On the other side of the map, more than a dozen states are cutting or phasing down income taxes. South Carolina, Arkansas, West Virginia, Georgia, Indiana, Kentucky, and Utah moved rates lower this year. Others tied future cuts to revenue triggers, which is a polite way of saying the cut happens if the budget can stomach it. High earners notice both lists. The question they ask me, in so many words, is simple. Which list is my state trying to join?
California and the One-Time Net Worth Bite
California’s billionaire proposal is the loudest of the three, and not only because the numbers are cartoonish. The measure would impose a one-time tax of 5 percent on the total net worth of residents worth $1 billion or more. Roughly 200 people. A simple majority. No long phase-in. If you have ever watched a legislative tax bill die in committee, you already know why backers like the ballot. It skips the usual grind.
Early on, plenty of observers assumed it would pass. Tax about 200 households, tell everyone else the bill does not touch them, and the politics look easy. A recent poll from a major California university complicated that story. Support sat at 45 percent. Opposition at 43 percent. That is not a landslide. That is a coin flip with a margin of error and a very expensive advertising war still ahead.
Two competing measures are also in the mix. I have sat through enough ballot cycles to know what that does. Voters get tired. Wording blurs. People who might have said yes to a clean wealth tax hesitate when three boxes seem to promise three versions of the same idea. Confusion is not a strategy you put on a flyer. It is, however, a real way measures lose.
The opposition is not theoretical. Sergey Brin, John Doerr, Patrick Collison, Michael Moritz, Eric Schmidt, Max Levchin and others have put more than $180 million into groups fighting the tax. That is not a rounding error. It is a signal that the people who would write the checks believe the vote is close enough to buy. Whether that money persuades a teacher in Fresno is another question. Money does not always win ballot fights. It does tell you the targets are taking the threat seriously.
Advisers are already walking clients through ways to shrink what a net-worth tax might see. Treasuries instead of concentrated stock. Real estate shifted into personal ownership. Valuations that were casual in a private round suddenly matter on a government form. None of that is a magic exit. A one-time 5 percent hit on a billion-dollar balance sheet is still $50 million before you argue about discounts, debt, and what counts as a California resident on the snapshot date. People with that much money do not wait for the snapshot if they can help it.
Several of the state’s best-known fortunes have already been linked to moves toward Florida. I will not pretend every relocation headline is about this ballot. People move for weather, family, and schools. Still, when the same names keep appearing next to the same tax fight, you stop calling it coincidence and start calling it a pattern. California has lost high earners before over income tax, housing, and crime perceptions. A wealth tax gives the story a sharper hook.
- The tax is one-time, at 5 percent, on net worth of $1 billion or more.
- It needs a simple majority, and it would touch roughly 200 residents.
- A university poll shows 45 percent in favor and 43 percent opposed.
- Competing measures could split the yes vote and muddy the question.
- Opponents have raised more than $180 million from well-known tech fortunes.
Here is the part I keep coming back to. A net-worth tax is not an income tax with a fancy name. Income taxes hit what you earned this year. A wealth tax hits what you already own, including stock that has not been sold. If your wealth is a private company or a pile of founder shares, 5 percent can force a sale, a loan, or a restructuring you did not want. Liquidity is the quiet crisis inside the headline rate. Billionaires have bankers. They also have concentrated positions that are painful to trim in a hurry.
Democrats in the state are not speaking with one voice. That split matters. Silicon Valley is not a monolith either. Some founders see the tax as a one-off price for public services they already use. Others see a precedent. One-time levies have a habit of developing sequels. If I were modeling this for a family office, I would not stop at the 5 percent. I would ask what the next ballot looks like if this one passes, and what the exit math looks like if it fails by a point.
Colorado and the End of a Simple Flat Rate
Colorado is the measure I would actually walk a business owner through line by line, because it does not pretend to touch only billionaires. Voters are being asked to replace the flat income tax of 4.4 percent with a graduated scale. The rate would rise to 7.4 percent on income above $500,000 and to 8.4 percent on income above $1 million. Those thresholds apply to single filers and joint filers alike. A couple earning $520,000 combined does not get a household pass. The higher rate lands on the slice above the line.
Analysts figure the increases hit about the top 3 percent of taxpayers. That is a wider net than California’s billionaire list, and it is why the politics feel different. People who do not think of themselves as rich can still clear $500,000 in a good year if they own a pass-through, sell a practice, or finally exercise options. A flat tax forgives that spike in the sense that the rate does not jump. A graduated tax notices.
There is a sweetener. Individuals or couples under $100,000 would see a cut, with a rate as low as 3.7 percent depending on income. The package is projected to raise about $2.7 billion a year for education, health care, and other services. That is the campaign in one sentence. Lower bills for most households. Higher bills for the top slice. More money for programs voters already say they want.
The opposition is not only the usual business lobby. The state’s Democratic governor, Jared Polis, has argued against the shift, alongside the state chamber of commerce. Their case is competitiveness. Colorado spent years selling itself as simpler than the coasts. A flat rate is easy to explain to a founder comparing Denver with Austin or Salt Lake City. A ladder that penalizes the next dollar is a longer conversation, and not always a winning one.
Colorado’s flat tax has provided taxpayers and businesses with a simple and predictable tax system. The ballot measure would replace it with a system that penalizes greater income, investment and success.
Americans for Tax Reform, in its critique of the graduated proposal
The pass-through point is the one I would not skip. A lot of Colorado’s upper-income tax is not a salary at a public company. It is profit from an S corporation, a partnership, a medical group, a ranch that had a strong year. When the individual rate climbs, the business rate climbs with it, because the income lands on the owner’s return. Conservative tax groups have leaned on that fact hard. They are not wrong about the mechanics. Whether voters care more about the mechanic or the $2.7 billion is the election.
I have watched flat-tax states treat simplicity as a brand. Once you give that up, you do not get it back with a press release. You can still be a good place to live. You are no longer the place that says the rate is the rate. For a household under $100,000, the cut is real and worth having. For a household that clears the thresholds in three years out of five, the new top rates become part of where you incorporate, where you hire, and whether the next expansion sits on the other side of the state line.
| Income slice | Proposed Colorado rate | Who feels it |
| Under $100,000 | As low as 3.7 percent | Most filers, a cut from 4.4 percent |
| Above $500,000 | 7.4 percent on the excess | Roughly the top 3 percent, including joint filers |
| Above $1 million | 8.4 percent on the excess | High earners and many pass-through owners |
| Current flat rate | 4.4 percent | Everyone, simple and predictable |
Projected revenue of $2.7 billion sounds large until you set it next to what a single relocated headquarters can mean for a metro payroll. I am not claiming the measure empties Denver. I am claiming the margin matters. States do not lose their tax base in one dramatic year. They lose it in a series of quiet decisions: the second office that opens elsewhere, the partner who establishes residency before a liquidity event, the family that was already unhappy with housing and needed one more reason.
Washington and the Attempt to Kill a Tax Before It Starts
Washington is the odd one, and maybe the most instructive. Before this year it sat with the small group of states that do not tax personal income. That absence helped pull Microsoft and Amazon, and it helped Apple, Alphabet, and Meta plant large offices there. No income tax is not the only reason those companies grew in the state. It was part of the offer, and companies remember offers.
In March the legislature passed a millionaire tax: 9.9 percent on household income over $1 million, scheduled to take effect in 2028, with collections starting in 2029. The projection is up to $4 billion from about 25,000 taxpayers. Next month, voters get a chance to repeal it before a single form is filed. The measure, Initiative 645, would scrap the millionaire tax and bar future state and local taxes on income.
Supporters say the millionaire levy is a pretext. Pass it for the top, then walk it down the income scale once the machinery exists. They talk about small businesses and working families, which is the standard shield in these fights, and sometimes an honest description of who sits just under a threshold that later moves. Opponents say the money is for schools, health care, and services the state has already promised. Both sides are arguing about a tax that has not collected a dollar. That is unusual. It is also why the vote feels preemptive rather than punitive.
Wording may decide it. The initiative includes language that the measure would decrease funding for public K-12 schools, universities, and health care. A recent poll found that when that budget language was in front of people, a majority said they would vote no. Read that again. The policy question and the ballot sentence are not the same object. I have seen this movie. Voters react to the sentence in the booth, not to the white paper they never opened.
If you live in Seattle or Bellevue and your household income sits over $1 million, 9.9 percent is not a symbol. It is a new line, starting later this decade, on top of whatever else you already pay. If the initiative passes, that line disappears and future legislatures have a harder time drawing it again. If it fails, the tax proceeds on the current timetable, and the no-income-tax brand that helped build the region’s tech economy takes a formal hit. Either result will be cited for years by states trying to copy it.
What High Earners Actually Do When the Rate Moves
People love a clean story. Tax goes up, rich people flee, schools collapse. Or tax goes up, revenue pours in, flight is a myth sold by lobbyists. The filings rarely cooperate with either cartoon. Massachusetts collected more than forecast and still watched billions in adjusted gross income leave in a single year. Both facts can sit on the same desk. A planner who picks only one of them is selling a mood, not a model.
Residency is the lever everyone reaches for, and it is clumsier than Twitter makes it sound. You do not become a Florida resident because you bought a condo and forwarded your mail. States look at days, domicile, where the family lives, where the dog’s vet is, where you vote, where the art hangs. California in particular has a long memory and a long audit trail. A sloppy move can leave you taxable in the old state for the year you thought you had escaped. I have seen clients spend more on the cleanup than they saved on the first year’s rate cut.
Still, the direction of travel is not imaginary. When a state adds a surcharge and a neighbor cuts its rate in the same season, the comparison does the work. You do not need a manifesto. You need a spreadsheet and a spouse who is willing to change school districts. Founders with remote teams make that trade faster than a surgeon with hospital privileges. That is why tech fortunes show up in relocation stories more often than, say, a partner at a regional law firm. Mobility is uneven. The tax code does not care. The household does.
- Map the actual rate change against your income, not against a slogan. Thresholds and joint-filer rules change the math.
- Separate salary, pass-through profit, and a one-time liquidity event. They do not respond to the same ballot.
- If residency is on the table, count days and ties before you count the tax savings.
- Watch effective dates. Washington’s levy does not collect until 2029. California’s wealth tax, if it passes, is built as a snapshot.
- Assume the vote is not the last vote. Precedents invite sequels.
Charitable vehicles, trusts, and the timing of a sale can all shift a year’s picture. They do not repeal a ballot. I am wary of advisers who open with a structure before they open with the statute. The clean questions come first. Are you a resident on the date that matters? Is the income above the threshold, or is the wealth above it? Does the measure tax a flow or a stock of assets? Get those wrong and the fancy trust is a costume.
The Competition Under the Populist Argument
There is a real demand, in a lot of households, for high earners to pay more. Housing is brutal in the same states that host the largest fortunes. Schools and clinics are not free. When asset wealth runs ahead of wages, a flat income tax can look like a gift to people whose money arrives as gains rather than paychecks. I do not think that frustration is fake. I also do not think a ballot can ignore what mobile income does when the bill changes.
States cutting rates this year are not doing it as a philosophy seminar. They are doing it because they think the next plant, the next clinic, the next family office might land somewhere else. Revenue triggers are a hedge. Cut if you can afford it. Hold if you cannot. It is less dramatic than a wealth tax, and for a household choosing between two Sun Belt cities, drama is not the point. The point is the rate on the last dollar and whether the rules stay put for five years.
California is asking voters to take 5 percent of billionaire net worth once. Colorado is asking them to steepen the income scale and hand most filers a small cut. Washington is asking them whether a 9.9 percent millionaire tax should exist at all, and whether income taxes should be fenced off going forward. Put those on one map and you see the national argument in miniature. Extraction where the fortunes already sit. Graduation where the flat tax used to be the brand. Prohibition where the brand was no income tax at all.
Three ballots, three theories: California — tax the stock of wealth, once, at the very top Colorado — tax the flow of income more as it rises Washington — block the income tax before the first collection
Perhaps the sharpest risk is not the rate you can read today. It is the signal. A state that passes a wealth tax tells every founder under the threshold that the definition of rich can move. A state that abandons a flat tax tells every expanding firm that simplicity was optional. A state that fails to repeal a new millionaire tax tells every recruiter that the old pitch needs a footnote. Signals travel faster than statutes. They show up in site-selection memos months before the first payment.
Households Just Under the Line
Billionaire coverage swallows the oxygen, which is a shame, because Colorado’s thresholds sit much closer to professional life. A two-income household in medicine, tech, or a successful trade can clear $500,000 without owning a jet. Joint filers do not get a higher gate. That design choice will surprise people who assume married couples are graded on a wider curve. They are not, under this proposal.
A liquidity year makes it worse. Sell the company, exercise a long-held option grant, or recognize a large gain, and you can vault into 8.4 percent territory for twelve months and then fall back. Flat systems treat that year as painful but rate-stable. Graduated systems treat it as the year the state shows up with a bigger bucket. Owners who can time a sale will try. Owners who cannot, because a buyer set the calendar, will just pay.
Washington’s $1 million household line has a similar cliff, delayed until the end of the decade if the repeal fails. Twenty-five thousand taxpayers is not a huge club in a state of that size. It is large enough to include more than celebrity founders. Dual earners in tech, successful professional practices, and some small-business owners on a strong year all fit. The initiative’s supporters worry the line will drift down. History in other states suggests the worry is not absurd. Surcharges rarely stay decorative.
Revenue Promises and the Migration Ledger
Backers of higher taxes have a clean exhibit. Massachusetts raised more than expected. If your goal is near-term cash for programs, that exhibit works. Critics have a clean exhibit too. Billions in adjusted gross income left in 2023. If your goal is the size of the base five years out, that exhibit works. I do not trust anyone who waves only one page.
Revenue can rise while the base erodes if the people who stay are earning more, if asset markets are strong, or if the surcharge grabs a slice the old code missed. Erosion can be real and still smaller than the new collections, for a while. The trouble starts when erosion compounds. A partner leaves, then a team, then the vendor who followed the team. Tax models are bad at that second-order stuff. Site selectors are not.
Colorado’s $2.7 billion projection and Washington’s $4 billion projection will be quoted as if they were deposits. They are estimates. Estimates assume behavior stays roughly put. Behavior is the variable these ballots are explicitly poking. A one-time California wealth tax has a different behavioral problem. It does not need people to earn less. It needs them to be residents, and valuable, on a date. That is why the planning conversations there already sound like exit planning, not rate planning.
How I Would Read the Results, Win or Lose
If California’s wealth tax passes narrowly, I would treat it as a precedent hunt, not a closed chapter. One-time language is comforting until a budget gap asks for an encore. If it fails narrowly, I would not treat the idea as dead. A 45-43 poll does not retire a proposal. It schedules a rematch, especially if competing measures did the killing rather than a clean no.
If Colorado replaces the flat tax, the brand change is the story I would watch, more than the first-year revenue. Firms that chose the state for simplicity will redo the comparison. Some will stay because talent and mountains are not a spreadsheet. Some will put the next office in a state that still fits on a postcard. If the measure fails, the flat rate survives as a political fact, not just a statutory one. Governors can point at the vote.
If Washington repeals the millionaire tax and bars future income taxes, the old pitch gets a second life, with a constitutional-feeling fence around it. If voters reject the initiative because the ballot warned about school and health funding, the 9.9 percent levy keeps its date with 2028 and 2029. Recruiters will add a sentence. Founders will add a column. Neither outcome is abstract for a household already over the line.
There is a smaller lesson I keep for clients who do not live in any of the three states. Ballot season is when dormant ideas get a costume and a campaign. A surcharge that failed in your legislature can return as an initiative if organizers think the wording will sell. Watching California, Colorado, and Washington is not only a local hobby. It is a preview of arguments that travel.
Practical Notes Before the Polls Close
None of this is a reason to panic-sell a house in October. It is a reason to know which proposal actually touches you. A California resident worth $40 million is not in the billionaire tax. A Colorado filer at $90,000 is being offered a cut, not a hike. A Washington household at $700,000 is not in the 9.9 percent bracket, though they might care about the precedent if they expect a bigger year later.
For those who are in the zone, the unglamorous work matters more than the rally. Document where you live. Do not assume a trust you set up for estate reasons solves a residency audit. Ask how a pass-through is sourced if you operate in more than one state. If a sale is plausible in the next two years, put the ballot timetable next to the deal timetable and see which one is less flexible. Deals slip. Election days do not.
I also think it is fair to say the public case for these votes is not empty. Schools, clinics, and infrastructure show up in the supporting arguments because voters have seen the gaps. A tax system that asks nothing extra of very high incomes, in states where housing costs have detached from wages, will keep producing these ballots. The countercase is not that public needs are fake. It is that the people asked to fund them can, past a point, fund a different state instead.
That tension is the whole election, really. Three states. Three designs. One argument about whether high earners are a base you can lean on, or a base you can lose. I do not think November settles it. I do think it will give the next round of legislators, founders, and families a scoreboard they cannot ignore.
If you are modeling a move, model the life, not just the rate. If you are staying, model the threshold, the effective date, and the chance of a sequel. And if you are watching from a state that cut taxes this year, do not get smug. Competition runs in both directions. The states writing the friendliest postcards are also the states that will be asked, sooner or later, to pay for the growth those postcards attract.
Ballots feel slower than markets. They are not slower than a relocation. By the time a household has changed schools, licenses, and doctors, the vote that prompted the conversation is already old news. The invoice is not. That is why I am treating these three measures as planning events, not as cable fodder. The rates are specific. The dates are specific. The only soft variable is what voters, and then residents, decide to do about them.
