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

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.

Public Comment on MassDOT’s I-90 Allston Multimodal Project National Environmental Policy Act Review Scoping Report

0 Comments

December 10, 2019

Pioneer Institute’s Public Comment calls on the Massachusetts Department of Transportation (MassDOT) to revise its Scoping Report on the I-90 Allston Multimodal Project and recommend an additional option to the Federal Highway Administration (FHWA). The Institute believes that closer analysis of an at-grade option may reveal that an at-grade design will shorten construction time, lower costs, create fewer negative economic and congestion impacts, and improve neighborhood access to parkland along the Charles River.

Pioneer Urges MassDOT to Reconsider At-Grade Throat Option for I-90 Allston Multimodal Project

December 10, 2019

Pioneer's new Public Comment calls on the Massachusetts Department of Transportation to revise its Scoping Report on the I-90 Allston Multimodal Project and recommend an additional option to the Federal Highway Administration.

How Occupational Licensing Laws Reduce State and Local Tax Revenues: The Public Finance Case for Occupational Licensing Reform

0 Comments

November 13, 2019

This new report shows that overly burdensome occupational licensing requirements not only slow down the Massachusetts economy and cost the state tens of thousands of jobs, but also reduce state and local tax revenue.

New Study: Excessive Occupational Licensing Hurts State Economy, Reduces Tax Revenue

November 13, 2019

Overly burdensome occupational licensing requirements not only slow down the Massachusetts economy and cost the state tens of thousands of jobs, but also reduce state and local tax revenue, according to a new study published by Pioneer Institute

The $8.5 Billion Marshall Plan for MBTA Needs

0 Comments

October 7, 2019

Going from much larger capital budgets to delivering the actual projects needed to repair and modernize the MBTA will require a “Marshall Plan” that includes improving T hiring practices and internal organization, as well as the strategic use of external resources.

Study Proposes “Marshall Plan” for Attracting and Retaining Talent Needed to Modernize the MBTA

October 7, 2019

Better hiring practices and internal organization, external resources…

The MBTAs Capital Spending Crisis

0 Comments

August 6, 2019

The Massachusetts Legislature must free the MBTA from overly restrictive procurement methods and the T must dramatically increase its project and contract management capacity if it is to reach aggressive capital spending targets aimed at upgrading the system and accommodating more riders.

Study Calls for Easing MBTA Procurement Restrictions and Beefing Up Project Management Capacity

August 6, 2019

Reforms needed if T is to achieve increased capital spending…

Co-author of Landmark Longfellow Bridge Study Optimistic about State Infrastructure Maintenance Investments

November 19, 2018

BOSTON - Reconstruction of the Longfellow Bridge is now complete,…