Jim Stergios is executive director of Pioneer Institute. Christopher R. Anderson is president of the Massachusetts High Technology Council. They are co-organizers of the Mass Opportunity Alliance.
Call it the Blue State blues.
Census data released last month brought bad news for the high-cost states of Massachusetts, New Jersey, New York, Illinois and California, which all led the nation in net out-migration in 2024.
Taxpayers fled these high-tax states and piled into low-cost, low-tax states such as Texas, Florida and North Carolina, where they can keep more of their money and, in many cases, retire their snow shovels.
Just a decade ago, the economy in Massachusetts was growing. In 2016 its economy saw growth as high as 3.7 percent, above the national average. But high taxes coupled with rapidly growing state spending have eroded the state’s competitiveness.
Since 2018, the state budget has increased by more than 50 percent — far outpacing inflation or family income growth. CNBC now ranks us 49th in the cost of doing business. The Tax Foundation’s 2026 State Tax Competitiveness Index ranked Massachusetts 43rd overall.
And while a majority of states cut taxes after the pandemic, Massachusetts voters narrowly approved a 9 percent income tax rate on annual earnings over $1 million in 2022.
Now, the state is losing residents to more affordable states like New Hampshire and Florida. In 2024, net out-migration was more than seven times larger than in 2010. From 2021 to 2024, more than 790,000 residents in total left Massachusetts — more than the entire population of Boston. Even accounting for people who moved in, the state still lost 164,000 residents.
It’s not only retirees or the ultra-wealthy who are calling it quits. Families, recent graduates, and mid-career workers — the future drivers of our state economy — are all leaving. When a state loses its population, the consequences cascade quickly. It starts with a loss of revenue at the state and local level, as sales, income, and property tax collections decline when residents and businesses move out. The “brain drain” of talented workers means the economic dynamism from start-ups and other innovative companies that historically boosted our state’s economy will dry up.
Residents who stay are left footing a growing tax bill, increasing the risk of structural budget shortfalls. And don’t count on dollars from Washington to plug those holes, as the size of many federal grants and programs is based on population size. We could even lose seats in the House of Representatives — just ask New York and California, which are set to lose as many as six seats combined after 2030 due to out-migration.
Two referendums approved for the ballot this fall would help our state rewrite its story. One would reduce our income tax from 5 percent to 4 percent. The other would limit the size of government revenue and refund taxpayers the excess.
History shows that Massachusetts can responsibly reduce taxes and still support its residents.
The last time Massachusetts cut income taxes, state revenue bounced back within a year and ended up higher after adjusting for inflation, according to a Pioneer Institute analysis.
New research suggests cutting the current income tax from 5 percent to 4 percent over three years would deliver more money to taxpayers and benefit the state’s long-term economic growth.
Taxpayers would save an average $1,300 per year, and the potential GDP benefits are up to $17 billion. Voters agree, with nearly 75 percent saying they support the tax cut.
Some critics argue that efforts to advance affordability and responsible spending threaten state services. State labor leaders in particular have been quick to allege that this tax cut would create a significant budget hole, along with other fiscal consequences. Their members are less skeptical, with over 80 percent of union members supporting the policy.
Massachusetts lawmakers have a chance to join the voters in the court of public opinion and adopt this pro-growth policy into law. If not, residents will likely take matters into their own hands this fall.
The post Massachusetts’s high taxes are shrinking its population appeared first on Washington Post.
