A Tale of Two Business Decisions

July 24, 2025

Last week, Massachusetts received a mixed bag of rankings on its business environment in CNBC’s Top States for Business index. While the Bay State saw an improvement in its overall ranking, it once again languished in 49th place for the cost of doing business.  

A real-world example of this ranking played out this week when Cambridge-based biotech firm Biogen announced it would be investing $2 billion in its US manufacturing operation. The investment won’t be made in Massachusetts, but at its Durham, North Carolina campus in Research Triangle Park. 

It’s certainly a departure from earlier this year, when the firm announced its plans for a new global headquarters and innovation hub in Kendall Square. With that plan still well underway, it begs the question: What is Massachusetts getting right, and what is it getting wrong when it comes to attracting business investment and development?

The Bay State has long been a national leader in research and technology, backed by significant state investments in artificial intelligence, biotech, and life sciences initiatives. Yet persistent challenges, including high costs, in Massachusetts’ business environment may be driving companies headquartered here to expand operations elsewhere.

Biogen is not leaving Massachusetts – but the choice to expand elsewhere is certainly worth analyzing. Let’s take a closer look.

The Draw of North Carolina’s Business Environment

According to the same CNBC rankings, North Carolina is #1 in the country for doing business. 

The Tar Heel State outperformed Massachusetts – and many other states – on business friendliness and the cost of doing business. On business friendliness – which includes metrics on state tax rates, insurance costs, and tax incentives for businesses – North Carolina earned an “A,” while Massachusetts landed near the bottom of the pack with a “D+”. 

On the cost of doing business – which looks at regulations on starting and operating a business, lawsuit climate, and how the state supports emerging industries such as technology – North Carolina gets a “B” while Massachusetts gets an “F.”

Massachusetts Has a Strong History of Research and Tech Investments

Massachusetts remains a powerhouse in research and innovation, offering several advantages for technology companies that choose to stay. According to CNBC’s rankings, the state received top marks on its education system, with a robust network of state colleges and universities that get significant state investment. The Bay State also outperformed North Carolina in technology and innovation as well as access to capital. It has long invested in research and development and leads the country in patents issued per capita. 

Additionally, Massachusetts has among the highest rates of venture capital investment per state gross domestic product (GDP), although that rate has been declining over the past few years relative to some of its New England neighbors. 

Massachusetts Also Harbors High Costs 

Amid many reasons for businesses to want to be here, the Bay State’s high state tax rates and rising state spending have gotten out of control, giving Massachusetts businesses and their employees potential reasons to relocate. 

According to the Tax Foundation, corporate taxes in Massachusetts are among the top ten highest rates in the country. MOA’s Opportunity Report Card calculates the sky-high corporate tax burden at over $15,000 per establishment – more than three times higher than that of North Carolina. 

Also concerning is the relatively high cost of living in Massachusetts – something that may be driving workforce talent out of the state. Data from the U.S. Federal Housing Finance Agency shows Massachusetts’ housing price index is nearly double that of North Carolina’s, meaning home prices are roughly double what they are in North Carolina for the same size property.

Utilities and energy costs are other key determinants of how expensive it is for people to live here. Last year, the Mass Taxpayers Foundation found the Bay State’s utility costs are 150% higher than the national average, and overall energy costs push Massachusetts to 48th worst in the nation. North Carolina, on the other hand, is in the top 10 states for lowest energy costs.

Two-thirds of former residents who have left Massachusetts since 2022 cited the state’s high cost of living as the primary reason for leaving. 

A Less-Competitive Business Environment is Driving Away Residents and Businesses

Massachusetts has recently experienced a concerning trend: a disproportionately high rate of in-state business closures relative to new openings, and contractions relative to expansions. It’s no surprise that office space vacancies have reached historic highs, with 21% in Boston proper and even higher rates for lab spaces. 

Because of Massachusetts’ relatively burdensome business environment, a recent survey by MassCPAs found 27% of their members’ business clients were considering moving out of state last year. 

Recent analysis by the Pioneer Institute shows Massachusetts is losing jobs in key industries – such as professional and scientific services, manufacturing, and information. This is even happening within the Boston metropolitan area. In fact, Massachusetts was one of just four states in the country to see private sector job losses in the last five years. By comparison, North Carolina and its Research Triangle (Raleigh-Durham-Chapel Hill) and Charlotte regions are robustly growing in private sector jobs. 

This isn’t just a business phenomenon. Massachusetts currently ranks as one of the states with the highest rate of outbound migration, especially among young professionals and other talented members of the workforce. A large majority of Massachusetts residents cite high taxes as the main reason for relocating. 

Conclusion

Massachusetts still leads much of the nation as a research and tech hub. State lawmakers have historically tried to support this status through vigorous funding and other incentives. But the state’s prevailing high tax and tough regulatory environment are still making it hard for businesses to thrive. Add in some of the highest costs of living – like housing and energy prices – in the country, making it especially difficult for employees to be able to afford living and working here.

Policymakers should look at what can be done to reduce these burdens to encourage businesses to stay and grow here and provide good-paying job opportunities for Massachusetts residents.