High-income residents have been fleeing the state for years, according to recent research from the Pioneer Institute, in a pattern that is worsening as taxpayers stare down the state’s newly passed millionaire’s tax.
According to research of Internal Revenue Service data conducted by the economic policy think tank, Massachusetts is the fourth worst state in the country when it comes to out-migration, behind only California, New York and Illinois.
“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,” Pioneer Executive Director Jim Stergios said with the release of the study.
Pioneer’s research showed that $900 million worth of wealth left the state in 2012, a number that skyrocketed to $4.3 billion in 2021. According to Pioneer, those making over $200,000 per year account for 60% of lost wealth due to out-migration. In 2021, those taxpayers took about $2.6 billion elsewhere, study authors say.
They are heading to New Hampshire and Florida — by 67% — with the Sunshine State becoming more popular in the past few years, the report adds.
“For three decades following the failed ‘Massachusetts Miracle,’ a bipartisan consensus emerged, whereby the state prioritized tax stability and measured approaches to shedding the derisive ‘Taxachusetts’ moniker. By the early 2000s, the Commonwealth joined the broad middle of the pack with regard to state tax policy,” study authors wrote.
Pioneer says a combination of the state’s estate tax, non-deductibility of state and local taxes beyond $10,000, and the passage of a 4% tax on incomes over $1 million which was “manipulatively titled the Fair Share Amendment,” combined with the rise of remote work while jurisdictions compete for talent, has returned Massachusetts to its “Taxachusetts” roots.
Study authors are not coy about who might be to blame for the rapid rise in out-migration.
“The recent rise of the anti-business and anti-capitalist progressive wing of the Democratic Party
has brought an end to that bipartisan consensus,” they wrote. “Massachusetts is once again
among the highest tax states in the nation. As a result, the rate at which higher earners are leaving has grown dramatically.”
According to U.S. Census data, the state population has increased over the last decade. In 2010, there were over 6.55 million people in the Bay State. As of 2020 it was over 7 million.
Correction: This article originally and incorrectly reported the Massachusetts population as decreasing from 2010 to 2020, when in fact it increased.
