Significant Wealth Migration | Massachusetts to Florida, New Hampshire

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

Case Studies on Re-Opening National Economies, and What to Expect in the U.S. and Massachusetts

0 Comments

April 30, 2020

Based on case studies from Europe, Massachusetts’ strategy for beginning to emerge from the COVID-19 pandemic may include allowing businesses to open in phases and extending social distancing guidelines that include mask-wearing and maintaining distances between individuals. This report compares the reopening approaches of three European countries – Austria, Denmark, and Germany – to highlight approaches that could inform the Commonwealth’s reopening strategy.

Report Finds “Reopening Day” in the Commonwealth Will Likely Include Phasing in Businesses and Contact Tracing

April 30, 2020

New study compares the reopening of three European countries – Austria, Denmark, and Germany – to highlight approaches that could inform the Commonwealth’s reopening strategy.

A Look at the Massachusetts Industries that are Most Vulnerable Due to COVID-19

0 Comments

April 20, 2020

A new report using recent data provided by the Massachusetts Executive Office of Labor and Workforce Development shows that hospitality, retail trade, healthcare and social assistance, and construction are the industries that have suffered the most unemployment as a result of the coronavirus outbreak.

Hospitality, Retail Trade, Healthcare Among ‘Most Vulnerable Industries’ in Terms of Unemployment due to COVID-19

April 20, 2020

Recent data provided by the Massachusetts Executive Office of Labor and Workforce Development show that hospitality, retail trade, healthcare and social assistance, and construction are the industries that have suffered the most unemployment as a result of the coronavirus outbreak, according to the new Pioneer Institute report, “A Look at the Massachusetts Industries that are Most Vulnerable Due to COVID-19.”

Unprecedented Massachusetts unemployment projections set the stage for a state budget crisis

0 Comments

April 8, 2020

The COVID-19 recession could cause Massachusetts’ unemployment rate to skyrocket to 25.4 percent by this June, according to a new policy brief published by Pioneer Institute. The Commonwealth’s unemployment rate was 2.5 percent in February.

Report: MA Likely to See Sharp Spike in Unemployment Rate

April 8, 2020

The COVID-19 recession could cause Massachusetts’ unemployment rate to skyrocket to 25.4 percent by this June, according to a new policy brief published by Pioneer Institute. The authors recommend that the state join others in lobbying Congress for large block grants to avoid a severe fiscal crisis.

Some Big, Broad Economic Trends in Massachusetts

0 Comments

April 1, 2020

A new report from Pioneer Institute that draws on data from MassEconomix shows that levels of employment in Massachusetts had surpassed pre-Great Recession levels as of 2018. In “Some Big, Broad Economic Trends in Massachusetts,” Pioneer analysis of two decades of data shows fluctuating employment changes across the state, as well as firm size information and the largest employers.

Pioneer Launches Report Series Highlighting Massachusetts Job Growth and Business Trends Since 1998

April 1, 2020

In “Some Big, Broad Economic Trends in Massachusetts,” Pioneer analysis of two decades of data shows fluctuating employment changes across the state, as well as firm size information and the largest employers. The report is part one of aa series that aims to provide deeper insight into COVID-19's economic impact.

The Federal Coronavirus Relief Act impact on Massachusetts

0 Comments

March 27, 2020

Congress has passed the Coronavirus Aid, Relief, and Economic Security Act, providing $2.2 trillion in financial relief to laid-off workers, hospitals, and distressed industries. The bill provides an extra $600 per week in unemployment benefits to each recipient for up to four months and extends benefits to previously ineligible categories of workers, including independent contractors, those with limited work history, and self-employed persons.

Greater Boston as a Global Competitor

0 Comments

February 12, 2020

This report finds that in order for Boston to become even more attractive to international companies and investors, Boston-area leaders must work to improve housing and healthcare affordability, transportation infrastructure, economic development policies, and education. Pioneer synthesized dozens of economic, lifestyle, and governance indicators into five categories of importance to Boston’s profile in the international competition for talent and investment.

Pioneer Report Offers Framework for Improving Greater Boston’s Global Competitiveness

February 12, 2020

Pioneer’s new report, Greater Boston as a Global Competitor, provides useful metrics to help Massachusetts formulate a strategy to become an even more attractive place for innovators and talent.

Pioneer Institute Announces New Economics Data Tool: MassEconomix

December 12, 2019

A new addition to Pioneer Institute’s Mass Watch data tool suite, MassEconomix, provides time-series data on job and business growth for all of Massachusetts. Pioneer has partnered with the Business Dynamics Research Consortium (BDRC), which is housed at the University of Wisconsin’s Institute for Business and Entrepreneurship, to acquire an employment database known as “Your-economy Time Series”, or YTS. This database provides a year-by-year look at companies and jobs that have existed in the Commonwealth since 1997.