The losses to the state could total $4.36 billion in reported income
(The Center Square) – Outmigration of high-income earners in Massachusetts will only grow with the implementation of the millionaire’s tax, a new policy brief shows.
Pioneer Institute on Friday released a new brief, “Debunking Migration Myths,” which uses data to illustrate how Massachusetts could potentially continue to lose workers as the 4% tax on income above $1 million, on top of the state’s 5% flat-tax rate, takes effect Jan. 1 after being ratified by voters in November.
The losses to the state could total $4.36 billion in reported income, according to the brief, as high-income earners in Massachusetts are already moving to New Hampshire and Florida. Those two states do not have an income tax.
Pioneer Institute said in its brief that many tax advocates are only using partial information and “number games” to support their claims. The organization pointed in its brief to a Center for Budget and Policy Priorities report that said Massachusetts’s annual average rate of outmigration as a percentage of high-income earners, being defined as those earning more than $200,000 annually, is lower than other states.
However, Pioneer reports, that Massachusetts already has the highest saturation of tax filers at 34.8% who are earning above $200,000 than any other state. Only Washington, D.C. has more.
But, Pioneer reports, that organization’s report does not capture the value of the scale of dollars leaving the state using those percentages.
In 2020 alone, according to the brief, Massachusetts and Washington, D.C. were the only places where more than half of the total income was earned by those individuals making more than $200,000.
Pioneer’s brief compares the Bay State with Rhode Island. In Massachusetts, just under 10% of all tax filers had income beyond $200,000, while Rhode Island had just 5% of its tax base earning that level.
According to the brief, if 2.3% of Massachusetts’ high-income earners leave, a figure that was cited by the Massachusetts Budget and Policy Center, the state would lose 7,785 taxpayers and $4.36 billion in income leaving the state. Contrasted with Rhode Island, it would lose 99 taxpayers and only $470 million in total income.
The brief reports that a $4.36 billion loss would be a big hit to the tax base, especially since the state would not be able to recuperate that loss through in-migration.
Originally published by The Center Square. Republished with permission.
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