(Bloomberg) — Massachusetts will lose almost $1 billion in annual revenue by 2030 as high taxes and housing costs push wealthy residents to move elsewhere.
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Migration from Massachusetts to other US states accelerated during the pandemic as the rise of telecommuting made it more feasible to live further from the office. If current trends continue, more than 96,000 residents with a combined adjusted gross income of $19.2 billion will leave the state annually by 2030, according to a study by Boston University’s Questrom School of Business. That will cost Massachusetts about $961 million in income tax revenue each year, the study estimates.
Last year, Massachusetts lost about 39,000 residents to other states, more than ten times the rate in 2013, with Florida and New Hampshire among the top destinations.
Prime-age workers have accounted for most of the exodus in recent years, with the 26- to 34-year-old group seeing the largest volume of departures, according to the study. More than half of those leaving Massachusetts are high-income.
Read more: Massachusetts Eyes Residence Tax to Fund Affordable Housing
“If our labor force and population is not growing, then we cannot expect to have economic growth in the future,” said Mark Williams, lead researcher on the study and a lecturer at Boston University, during a presentation on Tuesday. The persistence of telecommuting policies — especially among the knowledge-based industries that dominate Massachusetts — has made it easier for people to leave, Williams said.
Return-to-office rates in Boston have lagged behind the national average, with in-person visits in April still 39% below comparable 2019 levels, according to data from research firm Placer.ai. In contrast, traffic to offices in Miami, Washington, Dallas and Atlanta in April was the highest on a monthly basis since Covid. New York City’s office turnover rate now exceeds 80%.
Residents leaving Massachusetts are mostly moving to other states in the New England region such as Maine and New Hampshire, or heading south to Florida, North Carolina and Texas. These states tend to have lower taxes, cheaper and more affordable housing, and less expensive health care than Massachusetts.
Massachusetts recently passed a 4% surcharge on income of more than $1 million. The so-called millionaire’s tax has generated about $1.8 billion in revenue in the first nine months of the current fiscal year, far exceeding initial estimates placed in the state budget, according to data from the Massachusetts Department of Revenue. Still, it’s too early to gauge the long-term impact the tax will have on Massachusetts’ population growth, Williams said.
“Short term, we can get more tax revenue,” he said. “The question about this is, ‘Has it increased immigration?’ If this data says there is, then the state has to weigh that cost.”
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