The voices of reason who warned Massachusetts lawmakers that spiking taxes on wealthier Bay Staters would end in a beeline for the exits can point to the latest IRS data and say “we told you so.”
That doesn’t help the state, but it does underscore that the relentless push for a millionaires tax and other hikes on high-earners is ultimately undermining the goal of “fair share” proponents: boosting revenue to pay for Massachusetts programs.
The Pioneer Institute crunched 2021 data from the IRS, and its analysis revealed that net out-migration from Massachusetts is speeding up and is greatest among affluent residents who pay the most in state taxes. Between 2019 and 2021, Massachusetts rose from ninth to fourth among all states in net out-migration of wealth, behind only California, New York, and Illinois.
We were warned. In the runup last year to the passage of the Millionaires Tax, opponents outlined the consequences: David Tuerck with the Beacon Hill Institute produced financial predictions.
Tuerck said the tax hike would “kill” 9,000 jobs in the first year and cause up to 4,000 high-earning Massachusetts families to relocate.
State Rep. Nicholas Boldyga, R-Southwick, said top earners in Massachusetts “are going to flee the state in droves” to avoid the tax, leaving the commonwealth “in a much worse position.”
State Rep. Marc Lombardo, R-Billerica, said “the reality is that Massachusetts is flush with cash,” arguing Massachusetts has no need to raise taxes on the wealthy with so much green flowing in already.
“We’re already hemorrhaging people to the South,” said Lucas Noble, a small business owner from North Andover. “To states that have beautiful weather and are tax-free. Why make that worse?”
That’s the hallmark of a progressive agenda: Gin up a problem, pass legislation, and make matters worse for everyone.
“Net out-migration has nearly quintupled and the largest spike in departures occurred in 2020 and 2021, as remote work took hold and most other states were cutting taxes,” said Pioneer Executive Director Jim Stergios, who coauthored “Tax Reality Sets In” with Mary Connaughton and Eileen McAnneny. “Massachusetts’ inattention to tax and competitiveness policies is leading to a tsunami of departures.”
One myth of the millionaires tax is that those who worked hard for their success would be just fine with having cash-grabbers have another go at their wallets.
Massachusetts, however, doesn’t exist in a vacuum.
According to the data, 43 states enacted some form of tax relief in 2021 and 2022, While Massachusetts contemplated and ultimately raised income taxes during that time, 21 states reduced them.
Thanks to a boost from the remote model, individuals can work from anywhere, say a state with lower taxes, while still holding a Bay State job.
“If you build it, they will come,” as “Field of Dreams” famously noted. Here, if you overtax them, they will leave.
Now what’s Massachusetts going to do to stem the exodus of people and all that revenue?
