Massachusetts Could Lose $1 Billion a Year From an Exodus of Wealthy Residents

The Bay State? More like the Bye State.

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High earners are fleeing from Massachusetts, which could cost the state almost $1 billion in income tax revenue every year, Bloomberg reported on Wednesday. By 2030, more than 96,000 residents making $19.2 billion in adjusted gross income are expected to leave annually, according to a new study from Boston University’s Questrom School of Business.

“If our workforce and population is not growing, then we can’t expect to have future economic growth,” Mark Williams, the lead researcher of the study, said during a presentation on Tuesday.

The exodus is in large part an effect of remote-work policies that took off during the pandemic, as well as rising costs that high earners are looking to avoid. (More than half of those leaving the state qualify as such, Bloomberg noted.) The largest age group moving out of Massachusetts is 26 to 34-year-olds—they may have stayed in the state for their careers, but now they can work from virtually anywhere. In fact, return-to-office rates in Boston aren’t keeping up with the national average, according to data cited by Bloomberg: Visits in April were down 39 percent compared with 2019 numbers. Elsewhere, in places like Miami and Dallas, office traffic has risen to its highest point since the start of Covid.

Massachusetts also recently put into place a 4 percent surcharge on incomes greater than $1 million, Bloomberg wrote. The “millionaire’s tax” has brought in some $1.8 billion in revenue in less than a year, but it may also be driving away residents in that bracket.

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“Short run, we may be getting more tax revenue,” Williams said. “The question about that is, ‘Has that increased outmigration?’ If that data says it has, then the state needs to weigh that cost.”

Those leaving the Bay State are largely heading to areas with lower taxes and less expensive housing and health care, Bloomberg noted. That includes other New England states like Maine and New Hampshire, as well as southern states like Texas, North Carolina, and Florida. The latter group has become more popular with high-net-worth individuals across the country, with overall wealth migrating farther south from places like California and New York as well.

There’s probably something to be said for the sunnier and milder weather, too. Very few people enjoy nor’easters year after year after year.

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