The Wealth Exodus: Why “Taxing the Rich” is a Short-Sighted Strategy for Colorado

We are told that taxing the wealthiest among us is a “free” way to fund our future. But as we watch billionaires flee California and capital migrate to Wyoming, we must ask: When the tax base leaves, who is left to pay the bill? In Colorado, the push to end TABOR isn’t about a surplus we don’t have—it’s about the power to tax you without asking. For industries like child care, the consequences of this short-sightedness will be felt long after the moving trucks have crossed the state line.

The Global Reality: Capital is Mobile

The "tax the rich" experiment is currently failing in real-time. In California, the 2026 Billionaire Tax Act has already triggered a massive flight of high-profile tech founders and entrepreneurs. Reports indicate that over $1 trillion in assets moved out of the state in the last year alone as the ultra-wealthy relocated to Florida and Texas to protect their future earnings.

Across the Atlantic, the United Kingdom is learning the same lesson. Following the 2025 abolition of the "non-dom" tax status, the departure rate of company directors spiked by 40%. These are not just names on a ledger; they are the primary drivers of capital gains tax—the very revenue that fuels public services.

Colorado’s Vulnerability: The Capital Gains Threat

Colorado is at a crossroads. Our current flat tax provides stability, but activists are pushing for a graduated income tax that would target high earners. This is dangerously short-sighted.

Capital gains tax is one of the most volatile revenue streams in existence. Because realizing a gain is voluntary, people simply stop selling assets or move to 0% tax states like Wyoming when rates climb. If Colorado erodes its tax base, we lose the "top heavy" revenue that currently funds our schools and infrastructure. When the wealthy leave, the state doesn't stop spending—it just shifts the burden to the middle class through higher sales taxes and property fees.

The TABOR Myth: Authority vs. Overages

The argument to end the Taxpayer’s Bill of Rights (TABOR) is often framed as "unlocking" overages to fix our roads. However, the reality of 2026 is that Colorado is facing an $850 million to $1.1 billion budget shortfall. There are no overages to keep.

The push to dismantle TABOR isn't about managing a surplus; it is about unfettered authority. Proponents want the ability to implement bracketed taxes and new fees without ever having to ask for your consent at the ballot box. They want a blank check, but history shows that check eventually bounces when the people who fund it move away.

Intentions vs. Outcomes: Why Ideology Fails the Math Test

There is a clear divide between ideological intentions and practical fiscal actions.

• The Ideological Intention: The goal is often framed as "fairness"—using the success of the few to lift the many. It’s a popular sentiment, especially when state budgets for schools and healthcare are tight. Proponents argue that a 5% or 9% increase for a billionaire won’t change their lifestyle but could transform a community.

• The Practical Fiscal Reality: In the real world, capital is not a static pool; it is a moving stream. When policy is driven by ideology rather than economic gravity, it ignores Tax Sensitivity. In 2026, we are seeing that the "fair share" becomes zero the moment a taxpayer changes their zip code.

Pragmatic fiscal policy recognizes that a lower tax on a massive base creates more revenue and stability than a high tax on a vanishing base. While the intention of a graduated tax is to generate "more," the practical result is often "less" as the state becomes a risky "hotel" that investors check out of, but never check back into.

The Hidden Toll on the Child Care Industry

This isn’t just an "elite" problem. The child care industry is uniquely positioned to be hit from three angles:

• The Funding Gap: Colorado’s Child Care Contribution Tax Credit (CCTC) relies on the generosity of those with disposable income. When high-net-worth individuals leave the state, these private donations—which many centers rely on to stay afloat—vanish.

• The Labor Squeeze: As the tax burden shifts to middle-income families and small business owners, child care centers (often structured as S-Corps) will face higher operating taxes, making it even harder to pay competitive wages to early childhood educators.

• The Subsidy Crisis: In a shrinking economy, programs like the Colorado Child Care Assistance Program (CCCAP) are the first to be cut. We’ve already seen local ballot measures for child care funding fail in several counties this year because voters are already stretched to their limit.

We cannot afford to be short-sighted. If we drive away the base that funds our state, we aren't "taxing the rich"—we are taxing our own future.  ECEA is currently working on industry wide solutions that avoid unintended negative fiscal impacts.

Call to Action: Join ECEA to Protect Our Industry

Policy changes without a seat at the table lead to unintended consequences that threaten the very survival of private child care centers. The Early Childhood Education Association (ECEA) of Colorado is the only Colorado voice dedicated to representing the industry wide business interests of licensed private providers in the halls of the State Capitol and at the state department.

We are in the meetings so you don't have to be. As we navigate the 2026 legislative session and the growing threats to TABOR, our collective voice is our strongest defense.

• Advocate: Join a community that ensures legislators and state administrators understand the fiscal reality of running a child care center.

• Stabilize: Gain access to resources that help your program navigate regulatory and financial hurdles.

• Unite: Ensure that "unfettered taxing authority" doesn't become the burden that closes your doors.

Click Here to Become an ECEA Member Today and help us steer Colorado toward a sustainable future for early childhood education.  We need your membership so that we can elevate your voice!  

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ECEA Members Minute (click here)

Detailed information for ECEA members ONLY

• Preliminary Injunction Federal Hearing Details - You can listen but we will be updating you in case you miss it!
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• Members watch for our "Insider's Edge on Friday with a CCCAP Update!"
• Care Worker Attestation - Remind your staff.
• CDEC Organizational Chart
• CO Public Utilities Virtual Public Safety Power Shutoff Public Comment Hearing
• Relevant news stories
• FUN Field Trip Option Offered by an ECEA member!
• Jan. 28th - Member UPK Mega Rule discussion---go to our member community pages to sign up for the meeting!
• Remember:  Save the date - Attorney, Laura Hazen does a Members Support Meeting.  There are things you need to know ASAP to protect your business.--Go to our member community pages and sign up for the meet up!

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Our members make all that we do possible!  Are you doing your part?  Find out more at www.coloradoecea.org