Florida and New Hampshire are big winners in the Commonwealth’s drive to establish one of the least competitive state’s in the nation as newly released IRS data measuring adjusted gross income indicate a $4.1B loss in 2023.

“Newly released 2023 IRS migration data – the first full year after the 4 percent surtax on incomes over $1 million took effect – show Massachusetts losing more than double the amount of adjusted gross income (AGI) than in any year prior to 2020, ranking fourth among states in net AGI out-migration, behind only California, New York, and Illinois,” the Pioneer Institute announced today.

Meanwhile the House advanced a supplemental budget bill yesterday that would hold hostage a number of business tax cuts, including a key state deduction for equipment, software, and machinery that often spurs investment, if voters approve a ballot question this fall to reduce the state’s income tax from 5% to 4% over a three year period.

Florida and New Hampshire remain top destinations for Massachusetts tax exiles.

Even New York Governor Kathy Hochul acknowledged the tax drain from Blue States to more competitive Red States: “Maybe the first step should be to go down to Palm Beach and see who we can bring back home because our tax base has been eroded,” Healey’s fellow Democrat said at a Politico forum last week, “I have to look at the fact that we are in competition with other states who have less of a tax burden on their corporations and their individuals.” she said.

According to Pioneer “in 2023, roughly half of all outbound filers moved to one of those two states [FLA and NH], accounting for approximately 66 percent of the total AGI lost through domestic out-migration.”

Just three years after the Rolling Stones fled 93% tax rates in the UK for the south of France in 1971, economist Art Laffer drew a chart on a dinner napkin that demonstrates a fundamental truth about human nature.

Excessively high rates of taxation decrease economic output and thus total tax revenue - or drive economic output away to different jurisdictions. Inversely, at some point on the curve, lower tax rates generate more total tax revenue, due to increased economic activity.

“It seems Massachusetts lawmakers want a modern redefinition of Evacuation Day, no longer the moment when British ships left Boston Harbor, but rather a period where more taxpayers flee the Bay State for more favorable tax climates," said Christopher Carlozzi, NFIB State Director in Massachusetts regarding the House plan to tie business tax cuts to the ballot question.

Surveys by the MassCPAs in 2023 and 2024 concluded: “a significant number of high-income individuals and businesses are considering or have already relocated out of Massachusetts. This outmigration coincides with the surge in the number of taxpayers impacted by the surtax.”

“Massachusetts’ losses are concerning because they are big, broad and persistent year after year,” said Pioneer Institute’s Jim Stergios. “We are losing key working-age and pre-retirement cohorts—even as federal policy changes have shut off immigrant labor. That combination poses real risks for the state’s labor force, tax base, and long-term economic vitality. The question is: Are elected officials getting the message?”

"Beacon Hill leaders either believe that tax relief is a good thing for the Commonwealth or not, and they should not rely on extortionary gimmicks to prevent residents and small businesses from keeping more of their hard-earned money When they need it most," Carlozzi added.