Massachusetts loses billions in income after millionaire tax
Story by Greg Ryan •
(Bloomberg) –Residents exiting Massachusetts took a net of $4.2 billion in adjusted gross income with them in 2023, one of the largest totals in the country, after a tax on millionaires took effect.
Call it the Hochul Effect
The amountwas an 8% year-over-year increase, according to Internal Revenue Service data, even as the total number of taxpayers leaving the state slowed.
This was the first year that residentswere subject to a 4% surtaxon incomes over $1 million after voters approved the levy in 2022 to fund schools and transportation.
Several Democrat-led states have since approved or are considering similar taxes on top earners, partlyas a way to make up for federal funding cuts enacted under President Donald Trumpand also to pay for more ambitious agendas.
Supporters of the Massachusetts measurehail the more than $6 billion in revenue it’s brought to state coffers. Critics warn that it’s driving away entrepreneurs, even if Massachusettslacks the high-profile departures seen in California, which is weighing a wealth tax, or Washington, which enacted a millionaire tax earlier this month.
The new IRS data offers evidence for both supporters and opponents of the surtax.
Despite the tax’s implementation, the number of residents moving out of Massachusetts who reported income of $200,000 or more — the top bracket tracked in the IRS data — fell year-over-year. Net outflows from Massachusetts long predate the millionaires tax, especially to Florida and New Hampshire, its northern neighbor, which has no tax on wages or capital gains==. Total lost income was also higher in 2021 than 2023.
The state’s millionaires-tax collections have increased every year since 2023 and so far in fiscal 2026 have jumped 19% year-over-year to $1.3 billion.
That haul “shows most conclusively that the people with very high incomes continue contributing revenue at rising ratesbased on their residence in Massachusetts,” progressive organization Massachusetts Budget and Policy Center said in a statement.
The level ofincome leaving the state remained significantly higher than it was pre-pandemic, even as a Covid-induced explosion in moving activity abated. Thenet number of tax returns from outgoing residents dropped by 36% from 2022 to 2023.
The wealthy now make up alarger share of defectionsfrom Massachusetts. The top earners wereresponsible for 70% of the $4.2 billion in net outflows in 2023, a jump from the previous year andmore than doublethe level from 2019.
“We are trying to make money on a smaller tax base. It’s going to be harder,” said Jim Stergios, executive director of Pioneer Institute, a Boston-based think tank that opposes the tax.
Three business-backed organizations including Pioneer are backingballot questionsthis year, which they argue will recapture economic competitivenesslost because of the millionaires tax.One would lower the state income tax to 4% from 5%,while anotherwould cap how much state revenue can increase in a given year.(Voting is the way the leaders of the state to punish the higher earners still in the state, they’ll say the people voted it in, not us!)
Massachusetts Governor Maura Healey and other elected officials have blasted the proposed income tax cut, saying it will create a multibillion-dollar hole in an already-tight state budget.
https://www.msn.com/en-us/money/markets/ar-AA1Z4xdw
The article never explains how fiscally incompetent the leaders are in those states. TheNew Robin Hood affect, is to steal from the rich to pretend they are giving to poor!== Neither gets the benefit when states waste taxes on woke ideology. The states and counties should be forced to audit their states to see how much they waste, but they never do the rational or honest way to manage a budget.
BTW Hochul’s complaint on the Millionaires lost to FL is only going to get more billionaires and millionaires to leave, especially since she wants to go to Fl to drag them back to NY!
No offense to women but they mostly aren’t mathematically inclined, and running a budget in large states is about how much more than can spend on things they want. There are some brilliant women economists but not a ton. IMO