WHILE STATE LEADERS zero in on how to attract and keep people in Massachusetts, a new analysis from the left-leaning Massachusetts Budget and Policy Center argues that reports of the state’s population demise are greatly exaggerated.
Or, at least, the waters are muddier than “everyone is leaving,” argues Kurt Wise, a senior policy analyst at MassBudget.
He reviewed US Census Bureau data showing a slight increase in overall population – a slim 11,500 people added to the 7 million Bay State residents in 2022 and 2023 – and also Internal Revenue Service data showing 45,000 more people left the state than arrived in 2021.
“In short, the picture that can be drawn from available official data is inconsistent, though in any case, it is not one of crisis,” he wrote. “Nevertheless, migration data often is used – and misused – to push an agenda of tax cuts for very high-income households, the ultrawealthy, and large corporations. Cutting such taxes, however, would do nothing to help most people who choose to leave Massachusetts. Instead, it would deprive the Commonwealth of much-needed revenue that otherwise could be used to address challenges that likely are a factor in some people’s decision to leave the state.”
Researchers and business groups have been openly grappling with the scale and causes of Massachusetts outmigration, seen as both a serious risk to and symptom of the state’s competitiveness.
While the governor touts state rankings from personal finance website WalletHub – with Massachusetts ranked number one “top state to live in” overall, narrowly beating out Florida – the state’s cost of living remains a consistent drag in report after report, even as researchers forcefully disagree on tax policy grounds.
The latest Competitiveness Index Report from the business-backed Massachusetts Taxpayers Foundation concluded the state does well by metrics like education level and labor force participation, but it ranks in the bottom 10 of states when it comes to metrics like domestic migration, housing and childcare costs, and state and local tax collections per capita.
“The rate of domestic outmigration in Massachusetts, compared to competitor states, is
incompatible with long-term economic growth,” the Tax Foundation report’s authors wrote. “Just as concerning, the outflow is more highly concentrated among wealthier residents. Massachusetts has always been reliant on taxes from high-wealth residents to support state government and that reliance has never been higher than after the passage of the income surtax. Losing high-wealth residents poses a clear and present economic and public finance threat to the Commonwealth.”
Boston Indicators – the research arm of the Boston Foundation – noted in April that the birth rate is slowing in Massachusetts, making migration to the state increasingly important. According to the Boston Indicators analysis, “since about 2009, Massachusetts has been losing individuals at all income levels. These losses are more concentrated among middle- and high-income earners, whose paths diverged markedly from low-income earners around 2017.”
Likewise, the state is losing people from all educational attainment levels. But the most worrying trend from the Boston Indicator’s perspective is the flight of 25- to 44-year-olds, which in 2022 made up about three-fifths of the total losses by age group.
“They are recent graduates, young professionals, folks looking to start a family or buy a home,” the report’s authors wrote. Yet, “many of these individuals are simply leaving, likely due in part to high housing costs.”
Another report in April, this one from Boston University faculty member Mark Williams, supported that outflow analysis, with an interesting wrinkle – even as business groups argue that residents are fleeing for friendlier tax environs like Florida, over half of the departing Massachusetts residents stay in New England.
This means the picture is more complicated than taxes alone, Williams wrote in a CommonWealth Beacon op-ed. Health care and housing costs are also impediments to young people trying to settle into their most productive workforce years, he wrote.
Opponents of the recently passed Fair Share Amendment, or millionaires tax, argue that the surtax on those who make over $1 million per year is prompting the very wealthy to pack their bags and find a new home outside of Massachusetts. The surtax took effect in 2023, so outmigration analyses aren’t yet able to directly assess that claim.
Since last year, Massachusetts dropped 12 places in the Massachusetts Taxpayers Foundation assessment and is now ranked 46th in tax competitiveness. The analysis uses data prior to the implementation of the income surtax and 2023 tax relief legislation, the report notes, so “combined, these changes will likely worsen MA’s rankings.”
In the MassBudget report, Wise argues that IRS data show that Massachusetts is actually growing its population of very high earners quickly. The number of Massachusetts households with million-plus incomes increased by 40 percent from 2020 to 2021, according to the IRS data, likely through a combination of in-migration of some wealthy residents plus natural median income growth over time which is occurring faster in Massachusetts than most other states. At the same time, about one in six residents leaving Massachusetts in 2021 had incomes over $200,000, with their average household income well below $1 million, Wise wrote.
Among the 26-45 year old demographic, which accounts for over half of the people leaving Massachusetts in 2021, 80 percent of them had incomes below $200,000 a year.
“Again,” Wise wrote, “tax cuts for very high-income households are not a policy prescription that aligns with the income demographics of Massachusetts outmigration.”
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