Analysis of Massachusetts Millionaires Tax Impact on Wealthy Residents and State Revenue

The Millionaires Tax in Massachusetts has been a hot topic since its approval by voters in November 2022. Business groups like MassCPAs have been vocal about wealthy residents leaving the state for income-tax-free states like New Hampshire and Florida. However, actual data on the impact of the tax has been scarce.

The surcharge, which adds 4 percentage points to the state’s 5 percent income tax for earnings over $1 million, is earmarked for transportation and education. Advocates, including the teachers union-backed coalition Raise Up Massachusetts, argue that the benefits of investing in these areas outweigh any negative effects.

While concrete data on migration patterns post-tax implementation is lacking, Zach Donah, CEO of MassCPAs, claims that their poll shows an increase in residents considering relocation due to the tax. Donah stated, “Their clients were saying, going into the ballot initiative, ‘Look, if the state does this, it’s going to be the final straw for me.'”

On the other hand, supporters of the millionaires tax point to the strong revenue generated so far as evidence that wealthy individuals are not fleeing the state in large numbers. The Department of Revenue reported $1.8 billion in tax collections in the first nine months of the fiscal year, surpassing earlier forecasts.

Harris Gruman, executive director for the SEIU’s Massachusetts council, noted, “The revenue we have been able to collect to date suggests there’s no such thing happening. If anything, millionaires are making more money [than expected]. Something is driving up the revenues, rather than driving them down.”

The debate over the impact of the millionaires tax on Massachusetts residents continues, with conflicting opinions on whether the tax is driving wealthy individuals away or if it is generating much-needed revenue for the state. Stay tuned for more updates on this ongoing issue.