New Study Shows Significant Wealth Migration from Massachusetts to Florida, New Hampshire

Share on Facebook
Share on Twitter
Share on
LinkedIn
+

Read media coverage of this report:

Boston Herald:

Taxes driving wealth out of Massachusetts and into Florida, New Hampshire: report

Editorial: Wealthy have options to avoid tax hikes 

The Boston Globe: Massachusetts is losing wealthy residents to states with no incomes taxes, such as New Hampshire and Florida

The Bond Buyer: Massachusetts sees wealth exodus

State House News ServiceRemote Work Growth Adds Dimension to Tax Debate

Bloomberg Bay State Business: Researcher Andrew Mikula from the Pioneer Institute on their new study that shows wealthy individuals leaving Massachusetts (2:13)

The Howie Carr Show (Greg Sullivan)

The Eagle Tribune Editorial

Salem News Editorial

Gloucester Daily Times Editorial

Nightside with Dan Rea

Patch: Is Your Empty Building Still Burning The Midnight Oil?

Commonwealth magazine

NH Union Leader 

WWLP 

WWLP

BOSTON – Over the last 25 years, Massachusetts has consistently lost taxable income, especially to Florida and New Hampshire, via out-migration of the wealthy, according to a new Pioneer Institute study.

In “Do The Wealthy Migrate Away From High-Tax States? A Comparison of Adjusted Gross Income Changes in Massachusetts and Florida,” Pioneer Institute Research Director Greg Sullivan and Research Assistant Andrew Mikula draw on IRS data showing aggregate migration flows by amount of adjusted gross income (AGI). The data show a persistent trend of wealth leaving high-tax states for low-tax ones, especially in the Sun Belt.

“Because of our stable tax environment and concentration of talent, Massachusetts has outperformed most states and outpaced the nation in job growth since the Great Recession,” said Pioneer Institute Executive Director Jim Stergios. “Yet even during that period of growth we were shedding almost a billion dollars a year to low-tax states like Florida and New Hampshire.”

The report finds that Massachusetts has experienced a net outflow of $20.7 billion in AGI between 1993 and 2018. Unsurprisingly, the biggest beneficiaries were no-income-tax states like Florida, which captured 46 percent of it, and New Hampshire, which gained 26 percent.

“We saw this trend slow down temporarily during the Great Recession, when people became less mobile,” said Sullivan. “But it’s since come roaring back, and the magnitude is staggering.”

Between 2012 and 2018, Florida, which has no income tax or capital gains tax, saw a net $89 billion AGI inflow. Fully 70 percent of that eye-opening number was attributable to taxpayers with AGI of $200,000 or more. Over 30 percent of the total growth in AGI among all Florida taxpayers from 1993 to 2018 was attributable to the state’s net increase in migration. Meanwhile, the only reason why Massachusetts’ total AGI is still growing is because of income gains among stationary residents.

Over the last couple of decades, high rates of immigration have bolstered Massachusetts’ economic health and kept its population stable. However, large rates of domestic out-migration remain a threat to the long-term economic vitality of Massachusetts and much of the rest of the Northeast.

In fact, many of the states that have lost taxable income to Massachusetts on net since 1993 are also in the Northeast, with New York, Connecticut, and New Jersey contributing the most AGI. Some Midwestern states, like Illinois, Ohio, and Michigan, lost smaller amounts. However, considering the substantial wealth migration from Massachusetts to New Hampshire and Maine, geography alone can’t explain broad trends in the flow of capital.

“The legislature needs to be very careful in the new post-pandemic environment, when talent is more mobile,” said Stergios. “Businesses look at the business climate closely – especially tax issues – when they think about location. I’d hate to see us follow in Connecticut’s footsteps toward economic decline.”

Earlier in January, the Institute released “Connecticut’s Dangerous Game,” which demonstrated how multiple rounds of tax increases aimed at high earners and corporations triggered an exodus from Connecticut of large employers and wealthy individuals.

About the Authors

Andrew Mikula is a Research Assistant at Pioneer Institute. Mr. Mikula was pre­viously a Lovett & Ruth Peters Economic Opportunity Fellow at Pioneer Institute and studied economics at Bates College.

Gregory Sullivan is Pioneer’s Research Director. Prior to joining Pioneer, Sullivan served two five-year terms as Inspector General of the Commonwealth of Massachusetts and was a 17-year member of the Massachusetts House of Representatives. Greg is a Certified Fraud Investigator, and holds degrees from Harvard College, The Kennedy School of Public Administration, and the Sloan School at MIT.

About Pioneer

Pioneer’s mission is to develop and communicate dynamic ideas that advance prosperity and a vibrant civic life in Massachusetts and beyond.

Pioneer’s vision of success is a state and nation where our people can prosper and our society thrive because we enjoy world-class options in education, healthcare, transportation, and economic opportunity, and where our government is limited, accountable and transparent.

Pioneer values an America where our citizenry is well-educated and willing to test our beliefs based on facts and the free exchange of ideas, and committed to liberty, personal responsibility, and free enterprise.

Get Updates on Our Economic Opportunity Research

Related Content

Milton Shuts the Door
on Multifamily Housing Plans

The MBTA Communities Act, passed in 2021, provides that the 177 communities serviced by the MBTA must create multifamily zones to spur housing development close to public transportation. But the issue is an emotionally charged one, with passions high on both sides. And Milton residents in February rejected a plan to create such housing ‚ choosing a loss of some state funding over an approximately 25 percent increase in their housing stock, along with the possibility of greater congestion.

Pioneer Statement on Continuing Slide in Massachusetts’ Revenue

The Commonwealth’s tax collections continue to slide, totaling $3.594 billion in January, $268 million below what the state collected in January 2023, and short of the revised benchmark by $263 million. Massachusetts state government must live within its means by reducing FY2025 spending. The days of fiscal surpluses, unprecedented increases in year-over-year spending, and flowing federal aid have come to an end.

Pioneer Statement on Decline in State Revenues

The Commonwealth’s finances have stumbled hard in recent months, and based on a report the Department of Revenue (DOR) sent to the Legislature in January, the trend shows no signs of easing. Massachusetts needs a renewed emphasis on fiscal discipline and pro-growth policies to make the state economically competitive again.

Skill-based immigration could ease labor shortage

A recent Biden administration executive order that amends the Schedule A list, which identifies occupations experiencing labor shortages and allows immigrants in those occupations to expedite their employment in the U.S., could positively impact the hiring of skilled international workers for years to come — a welcome development as the country and Massachusetts struggle to attract talent amidst a worsening labor shortage.

My Musings on Massachusetts’ Fiscal Picture

Since the start of FY2024 on July 1, 2023, the state has experienced six straight months of revenues falling short of expectations. The single biggest factor is the unprecedented growth of the state budget since FY2021. The $15 billion increase in state spending contextualizes the seemingly modest projected revenue growth of 1.6 percent for FY2024 by highlighting that the base is very inflated.

The Massachusetts Workforce: Abundant Resources, Steep Challenges

Massachusetts features a strong workforce training system with abundant resources yet faces challenges in matching jobs and applicants, training youth, and attracting sufficient numbers of skilled immigrants, according to a pair of studies from Pioneer Institute.

New Report Explores Impact of Welfare Benefit Cliffs

In “Benefit Cliffs: A Literature Review on Welfare Structures as a Disincentive to Work,” Pioneer researcher Aidan Enright examines the extent to which complicated federal and state requirements related to welfare programs can provide a disincentive to employment or to working additional hours.

Statement on Massachusetts Falling from 34th to 46th on Tax Foundation’s 2024 Business Tax Climate Index

Massachusetts policymakers should pay close attention to the latest evidence of the Commonwealth’s declining competitiveness. Last week, the Tax Foundation published its 2024 State Business Tax Climate Index, which showed Massachusetts’ ranking falling more than any other state, from 34th to 46th.

Pioneer Institute Statement on the State Legislature’s FY2024 Tax Relief Package

The recent advancement of a tax bill H. 4104, that is expected to be enacted by the Legislature this week after languishing for more than 20 months, puts Massachusetts taxpayers one step closer to realizing some tax relief. However, it may be too little to tackle the Commonwealth’s affordability and competitiveness challenges.

Poll: MA Voters Oppose Legislative Proposals to Change Tax Rebate Law

A strong majority of registered Massachusetts voters oppose a plan recently announced by state legislative leaders that would change the way tax rebates are distributed in Massachusetts under a state law approved by voters in 1986, according to a new poll sponsored by Pioneer Institute and the Massachusetts High Technology Council.

Senate Tax Package Misses the Mark on Competitiveness

The Senate tax package, S.2397, is heavy on provisions that reduce the tax burden for certain taxpayers, thereby helping those that qualify for the expanded credits and deductions. The bill, however, is light on provisions that will improve the Commonwealth’s competitiveness.

Study: Immigrant Entrepreneurs Benefit N.E. Economy, Despite Facing Obstacles to Growth

BOSTON – Immigrants in Massachusetts and New England are more likely to be self-employed, but the businesses they own tend to be in different industries than those owned by the U.S. born, according to a new study published by Pioneer Institute.