“Millionaire tax” causes top earners to leave Massachusetts, according to accountant survey

Since Massachusetts voters approved the millionaires' tax in November 2022, business groups like MassCPAs have repeatedly reported how it is causing wealthy residents to move to other states that do not impose income taxes, such as New Hampshire or Florida. Actual data, however, is scarce, and tax revenues from the tax increase have so far exceeded state projections.

The surcharge adds an additional 4 percentage points to the state's 5 percent income tax on annual incomes over $1 million, with the revenue going to transportation and education. Proponents, led by the teachers' union-backed Raise Up Massachusetts coalition, argue that the economic benefits from spending on these purposes more than outweigh the negative impacts.

Reliable data has been hard to come by so far; the most recent publicly available IRS numbers on migration date from before the millionaire tax vote. But Zach Donah, executive director of MassCPAs, says his group's survey shows that the tax is causing more and more people in Massachusetts to rethink where they live.

“Before the referendum, our members said this was going to be really significant,” Donah said. “I think the data we're collecting shows they were right. Their clients said before the referendum, 'Look, if the state does this, that's going to be the straw that breaks the camel's back for me.'”

Proponents of the millionaire tax point to the revenue the surcharge has raised so far as evidence that rich people aren't leaving in droves, at least not yet. The IRS recently reported that the state collected $1.8 billion from the tax in the first nine months of this fiscal year. That surprisingly large amount puts the state on track to exceed previous projections of up to $2 billion for a full year.

“We have no concrete evidence that people are moving away in greater numbers than before,” said Harris Gruman, executive director of the Massachusetts Council of SEIU. “The revenue we have been able to collect so far suggests that this is not happening. If anything, millionaires are making more money [than expected]. Something is driving revenues up instead of down.”

Jon Chesto can be reached at Follow him @jonchesto.

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