THE LEFT-LEANING Massachusetts Budget and Policy Center tossed a provocative analysis into the tax reform debate on Beacon Hill on Thursday, issuing a short but pointed brief suggesting the business community narrative that millionaires are fleeing the state is unfounded.
The Budget and Policy Center said Internal Revenue Service data from 2011 to 2020 indicate out-migration of high-income households is low in Massachusetts compared to other states.
“As a consequence, delivering large tax cuts to these few households to stem a non-existent exodus is misguided,” the center said in the brief.
The data the policy center relied on in its brief predates a big tax on high-income earners that was approved by voters in November — a 4 percentage-point income tax surcharge on earnings over $1 million.
The so-called millionaire tax has prompted concerns about the state’s competitiveness and spurred Gov. Maura Healey to put forward a $1 billion tax reform package that would provide relief to seniors, renters, and parents while paring back the reach of the estate tax and eliminate the higher tax on short-term capital gains.
Her proposal appears to have some traction in the Legislature, although some lawmakers have questioned the need to cut taxes that impact wealthier residents.
Kurt Wise, the senior policy analyst at the Budget and Policy Center, said in the brief that research shows state tax levels have little impact on decisions by high-income households about where to live. Wise suggested it would be smarter to use tax revenues to make investments that would make Massachusetts more affordable for working families rather than cutting taxes to benefit the wealthy.
The brief said Massachusetts ranked tenth lowest in the country in terms of its share of households with income greater than $200,000 that left the state between 2011 and 2020.
Forty other states had a higher level of out-migration of high-income earners. Seven states with no income tax at all, including Alaska, Nevada, Wyoming, New Hampshire, Tennessee, Florida, and Washington, ranked worse than Massachusetts.
The data came from an analysis of IRS data by the Center on Budget and Policy Priorities, which focused on the percentage of high-income households that left the state rather than the actual number that left.
