FACT CHECK: A Growing Consensus on MA’s Competitiveness Problem

The Massachusetts Taxpayers Foundation (MTF) just released its annual competitiveness index, assessing how the Commonwealth stacks up against the rest of the country. 

Spoiler alert: Massachusetts maintains many competitive strengths, but is becoming an increasingly difficult place to live and do business. 

FACT: Massachusetts Has a Strong Foundation in Education and Innovation, But Lower-Cost States Are Gaining Ground 

Massachusetts has long relied on its world-class education system and innovation economy as competitive advantages. MTF’s index confirms these strengths, ranking the Commonwealth first in educational attainment and third in venture capital investment.

However, there are signs that its competitive edge may be slipping as lower-cost states attract more investment. Between 2024 and 2025, venture capital investment grew by more than 50% in Florida and Texas, compared to just 7% in Massachusetts.

The state also faces challenges maintaining the talent pipeline that fuels its innovation economy. MTF found that international student enrollment growth has slowed considerably, while Texas grew its international student population at four times Massachusetts’ rate between 2024 and 2025.

Retaining young talent presents another challenge. According to MTF polling, 40% of Massachusetts residents ages 18 to 29 see themselves leaving the state within the next five years. Among respondents pursuing additional education, the cost of living and economic opportunities were leading reasons for considering a move.

FACT: Tax Relief Is a Key Part of the Competitiveness Equation

MTF agrees that lowering the tax burden could help address affordability concerns and strengthen Massachusetts’ long-term competitiveness. Its polling found that among residents considering leaving the state in the next five years, 46% cited high taxes as a reason.

For instance, Massachusetts is one of the few states that still imposes an estate tax, raising concerns about retaining families and their wealth. MTF suggests eliminating this tax could be one straightforward way to start easing the tax burden, a proposal MOA has also supported.

Residents also face high income and property taxes, while the state’s surtax on income over $1 million has raised additional concerns about keeping high earners, entrepreneurs, and investment in the state. 

Reducing the tax burden is not an end in itself. The goal is to make Massachusetts a more competitive place where residents want to live, businesses want to invest and grow, and young workers can afford to build their futures. 

FACT: Massachusetts High Cost of Living Is Pushing Residents to Consider Leaving

It’s expensive to call the Bay State home, and lowering taxes is only one piece of the puzzle. The Commonwealth ranks in the bottom five for overall cost of living, as well as energy costs, healthcare costs, and childcare costs. The state also continues to struggle with housing affordability, ranking in the bottom 10 for housing production.   

The high costs are weighing on residents. Among those considering leaving Massachusetts in the next five years, nearly two-thirds cite the cost of living as a reason.

Those concerns resemble the experiences of residents who have already packed their bags. A recent MOA survey of Massachusetts residents found that high taxes (51%) and the cost of living (44%) were among the leading reasons residents left the Commonwealth. 

Recent IRS migration data reflects these concerns. Hundreds of thousands of residents have moved out of Massachusetts in recent years, as the Commonwealth continues to compete with lower-cost states for residents, workers, and businesses. 

FACT: Massachusetts Is Falling Behind in Employment Growth and Business Formation

Massachusetts’ competitiveness challenges also extend to its business climate. MTF ranks the Commonwealth 45th nationally for private employment growth and 49th for business formations per private employee, underscoring the state’s weak performance in creating jobs and new businesses.

These findings align with recent MOA analysis showing that private employment declined in Massachusetts while competitor states, including Florida, Texas, and North Carolina, continued to add jobs.

Businesses in the Bay State face significant costs, including high energy prices, unemployment insurance expenses, and corporate income taxes. In the third quarter of 2025, Massachusetts recorded roughly 4,600 more business contractions than expansions, continuing a broader trend of businesses downsizing rather than growing. 

Such high cost pressures can make it more expensive to operate, expand, and hire in Massachusetts, particularly for small businesses and employers considering where to invest.

Conclusion

This report is the latest in a growing consensus that Massachusetts needs to prioritize affordability, especially as it relates to competitiveness overall. As MTF suggests, easing the tax burden is a good place to start. 

No matter where policymakers decide to start when it comes to addressing affordability and competitiveness, it’s clear our state cannot continue down its current economic path.