Report: Mass. taxpayer exodus continues (2024)

BOSTON — Massachusetts lost more than $3.8 billion in state-adjusted gross income between 2021 and 2022 as residents fled to New Hampshire, Florida and other low-tax states, according to new Internal Revenue Service data.

The IRS data, based on income tax returns, shows the Bay State lost a net of more than 45,000 residents in the 2021 and 2022 calendar years — taking with them more than $3.9 billion in taxable income. That’s the fifth highest rate of domestic outmigration in the nation following New York, Illinois, New Jersey and California.

New Hampshire and Florida were the biggest beneficiaries of Massachusetts’ transplants, the IRS data shows. More than 18,189 people moved from New York to Florida, taking $1.4 billion. Another 23,596 Bay Staters moved to Florida, bringing more than $2.8 billion in income with them, according to the IRS.

The Pioneer Institute, a Boston-based think tank, says the data shows the largest cohort to flee Massachusetts were 26- to 35 year-olds, with 9,500 more tax filers leaving than coming into Massachusetts in 2022, more than five times the amount a decade earlier.

“This loss of young talent hinders the state’s future innovation and economic growth, which will compound over decades,” said Mary Connaughton, Pioneer’s director of government transparency. “The cost of housing is a leading factor and the recent housing bill is not enough to address this critical challenge.”

“We need more innovative solutions at the local level to adequately boost the state’s housing supply,” she added.

The report is the latest in the series that highlights how Massachusetts’ population is shrinking despite an ongoing influx of new arrivals, many through immigration.

Still, the state’s outmigration appears to be slowing, with about 18,000 fewer residents leaving the state in 2023 than in 2022 — a 31% drop, according to the latest census data, released in May.

Experts say the outmigration has less to do with politics than it does with a lack of housing, prevailing wages and access to employment.

But federal data shows the population decline has major implications for the states, revenue, and tax collections. The state has seen its revenue benchmarks from tax collections fall short over the past year.

Massachusetts lost an estimated $4.3 billion in state-adjusted gross income in 2020-21 tax year as residents fled to other low-tax states, according to the latest IRS figures.

On Beacon Hill, state leaders have approved proposals to cut taxes and reduce the state’s high cost of living as part of a broader effort to stop outward migration and make the state more attractive to new families and businesses.

Gov. Maura Healey, a first-term Democrat, has expressed concerns about the exodus of residents and businesses in the wake of the COVID-19 pandemic.

Healey has pointed to a lack of housing as a primary reason people are leaving the state, making the case for expanding stock and making homes more affordable. She acknowledged the impact of the housing crunch on outmigration at an event in Lowell, where she and other officials announced $27 million in tax credits for new housing developments in Salem, Lawrence and Haverhill and other ‘Gateway’ cities.

“I love New Hampshire, but I want people to stay here in Massachusetts,” Healey said in remarks on Tuesday. “I don’t want them going north of the border.”

But critics point to the state’s high tax burden, including the voter-approved millionaires’ tax that set a new 4% surtax on individuals with incomes above $1 million a year. They say despite a tax reform package signed by Healey last year, the state needs to do more to ease the burden on residents and businesses.

Others say concerns about outmigration are overblown, and point out that people leave the state for new jobs, college and other reasons other than consternation over high taxes, the cost of living, or the lack of affordable homes.

A 2023 report by the left-leaning policy group Massachusetts Budget and Policy Center says IRS data from 2020 to 2021 shows that Massachusetts has a lower rate of outmigration among high-income households earning $200,000 or more a year than that of low- and middle-income households.

The report’s authors say that data suggests state tax levels have had “little impact” on the decisions of high-income households.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com

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Report: Mass. taxpayer exodus continues (2024)

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