Editorial Staff

Proposition 80 Will Increase Out-Migration of High Earners and Businesses

/in , , , , /by Editorial Staff
Share on Facebook
Share on Twitter
Share on
LinkedIn
+

Passage of November 2018 ballot measure would jeopardize Massachusetts’ long-term economic health

BOSTON – Passage of Proposition 80, the tax hike proposal scheduled to appear on the November 2018 Massachusetts ballot, would accelerate migration out of Massachusetts, especially to Florida and New Hampshire, according to a new Pioneer study. Proposition 80 would add a 4 percent surtax on any annual taxable income over $1 million.

Download "Will The Wealthy Leave?"

In “Will The Wealthy Leave? They Already Are and Proposition 80 Will Only Make It Worse,” Pioneer Institute Research Director Greg Sullivan draws on IRS data showing aggregate migration flows by amount of adjusted gross income (AGI) and age of the primary taxpayer. The data show a strong correlation between state tax levels and migration patterns.

The report finds that Massachusetts already experienced a net outflow of $15.9 billion in AGI between 1992–93 and 2014–15. Unsurprisingly, the big­gest beneficiaries were no-income-tax states like Florida, which captured 47 percent of it, and New Hampshire, which gained 27 percent.

Between 2011–12 and 2014–15, no-income-tax and no-capital gains tax Florida saw a net $39 bil­lion AGI inflow. Fully 72 percent of that eye-opening number was attributable to taxpayers with AGI of $200,000 or more. Nearly 40 percent of the total growth in AGI among all Flori­da taxpayers from 1992–93 to 2014–15 was attributable to the state’s net increase in migration. By driving more residents and businesses to states with no income tax, Proposition 80 poses a serious threat to Massachusetts’ long-term economic health.

“Proposition 80 backers say the measure will not lead to an exodus of high earners,” said Pioneer Institute Executive Director Jim Stergios.  “If the initiative passes, wealthy individuals will do what they are already doing — moving out — and they will do it at a much faster clip than is the case today.  The result is Massachusetts will have higher taxes and a lot less money than proponents think.  As the old saying goes, there is no such a thing as a free lunch.”

Pioneer Institute is an independent, non-partisan, privately funded research organization that seeks to improve the quality of life in Massachusetts through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.

Get Updates on Our Economic Opportunity Research

Related Posts

Joséphine Erni on Bringing Swiss Innovation to the U.S. Market

This week on JobMakers, host Denzil Mohammed talks with Joséphine Erni, Innovation Lead at Swissnex in Boston and New York, and immigrant from Switzerland. She explains how building collaborations between the highly entrepreneurial Swiss and the world’s biggest market, the U.S., gives rise to incredible innovations that benefit the world.

Josh Bedi on How Immigrants Boost Native Entrepreneurship

This week on JobMakers, host Denzil Mohammed talks with Dr. Joshua Bedi, child of an immigrant and postdoctoral researcher in entrepreneurship in the Department of Strategy and Innovation at Copenhagen Business School in Denmark. He is the son of an immigrant who relocated from India to Jackson, Mississippi, and started a business. It was a simple neighborhood gas station, but also a symbol of what hardworking immigrants can do to boost innovation and business generation in host countries, as you’ll learn in this week’s JobMakers podcast.

Pioneer Institute Statement on Question 1

Yesterday, voters came closer than many expected to rejecting the largest tax increase in Massachusetts history, even though opponents were dramatically outspent by the unions that bankrolled the amendment to the state Constitution. 

Steve Tobocman and Mamba Hamissi on How Refugees Are Revitalizing Detroit

This week on JobMakers, host Denzil Mohammed talks with Steve Tobocman, head of the economic development nonprofit Global Detroit, and one of the thousands of refugee business owners he’s assisted, Mamba Hamissi, Burundi native and co-founder of Baobab Fare, an East African restaurant.

Grading State Governors: Do Higher Taxes Equate To Higher Value?

This week on Hubwonk, host Joe Selvaggi talks with Cato Institute’s Chris Edwards about the new report he co-authored entitled, "Fiscal Policy Report Card on America’s Governors 2022." They discuss how Massachusetts Governor Charlie Baker’s fiscal stewardship compares with other states, and explore whether higher tax rates and spending correlate with better state performance and resident satisfaction.

The Causes and Potential Cures for Inflation

This week on Hubwonk, Harvard economist and Pioneer Institute board member Ed Glaeser interviews Larry Summers, former U.S. Treasury Secretary and President Emeritus of Harvard University, for a special episode on the origins of inflation, its impact on the American economy, and a roadmap to recovery.

Sheetal Bahirat Turns a Profit on Food Waste

This week on JobMakers, host Denzil Mohammed talks with Sheetal Bahirat, founder and CEO of Hidden Gems Beverage Company, maker of Reveal Avocado Seed Brew, and immigrant from India. Food waste is an understudied and underutilized component of our daily lives with huge implications for our bodies and the planet - it is the number one contributor to climate change.

How did tax hikes work out for Connecticut?

Pioneer Institute's Charlie Chieppo shares data on the economic impact of tax increases in Connecticut - which has the 2nd highest state and local tax burden in the country and ranks 49th in private sector wage and job growth. As Massachusetts considers a proposal to raise income taxes, it is important to learn from the experience of other states. Learn more.

Income Inequality Explored: Wage Gap Overlooks Government Intervention

This week on Hubwonk, host Joe Selvaggi talks with John F. Early, economist and author of the newly released book, The Myth of American Inequality, about the history of income inequality, its true size, and trends. They also discuss how census data used in policy decision-making misses nearly all the effects of government intervention and distorts the truth about the income American families actually have to spend.

How would a tax increase impact the MA economy?

Pioneer's Charlie Chieppo explains how an income tax hike in Massachusetts will impact retirees and small business owners - not just "the super rich."

Study: Legislators Must Answer Key Questions Before Setting Policy for App-Based Rideshare/Delivery Workers

After Massachusetts’ Supreme Judicial Court declared an initiative that was to appear on the November ballot unconstitutional, the issue of how to classify app-based rideshare/delivery workers is back in the hands of the state Legislature.  A new study published by Pioneer Institute distills from the research literature eight questions legislators must answer before determining how to address this fast-growing industry.

WSJ op-ed: Don’t Make Massachusetts ‘Taxachusetts’ Again

Unlike many blue states, Massachusetts has resisted the temptation to raise taxes on high earners. That antitax fortitude is about to be tested. In November, state legislators will ask voters to approve an amendment to the Massachusetts constitution adding a 4% surcharge to annual income over $1 million.