FACT CHECK: New IPS Study Gets It Wrong on Surtax Impacts

A recent study by the Institute for Policy Studies (IPS) asserts that Massachusetts’ surtax on earnings over one million dollars has not had a negative impact on the state. The study points to two data sources that allegedly prove the “number of wealthy individuals and their cumulative wealth grew after the enactment of higher taxes on high earners in Massachusetts.” 

The claim is both wrong and misleading. It relies on an improper dataset from the consulting firm Wealth-X, and is contradicted by data from the Internal Revenue Service and recent surveys. 

Problem #1: Wealth-X Data is Useless to Assess Surtax Impacts 

In its Massachusetts report, IPS uses data from Wealth-X to claim “the number of millionaires by net worth…rose by 38.6 percent between 2022 and 2024, from 441,610 individuals to 612,109. In current dollars, their collective wealth increased from $1.6 trillion to $2.2 trillion or 37.3 percent.”

But wait: Wealth-X develops its wealth data by “assess[ing] all asset holdings, including privately and publicly held businesses and investable assets.” In simple terms, that means the rising value of your house, your investment account, or your small business might have made you a millionaire on paper in 2023 or 2024 – even if your taxable earnings that year were nowhere near a million dollars. 

Indeed, rising home prices in Massachusetts and gains in the stock market likely explain a large percentage of the so-called “rise” in millionaires in the IPS report. For example, Zillow shows that home values in Massachusetts increased by more than 20 percent from the start of 2022, and the S&P 500 rose by 22 percent on net over the same time period. 

Does this mean the surtax is not hurting Massachusetts? Hardly – in fact, the Wealth-X data can’t even answer the question. The surtax is not charged on your investments or your unsold home value – it’s charged on income you earned that year over one million dollars. 

Everyone has access to that income data from the IRS through 2022 – and the number of “millionaire” tax returns declined sharply the year Massachusetts’ income surtax was passed. 

Problem #2: IRS Data Contradicts This Bogus Study

The best available data tracking Massachusetts tax filers comes directly from the U.S. Internal Revenue Service. These records of actual people and their tax returns tell the opposite story as the Wealth-X model relied on by the IPS study.

The number of federal tax returns for Massachusetts residents with an adjusted gross income of $1 million or more was previously steadily growing until a sharp decline in 2022 when Massachusetts’ income surtax was enacted. 

Don’t take our word for it: The IPS study includes the following chart from the IRS’ Statistics of Income state data by income bracket, which clearly shows that the number of millionaire earners declined sharply in 2022. 

That same year, Massachusetts had more taxpayers leaving the state than entering from other states – a net outmigration.

• IRS data found 103,148 individual income tax returns filed for those who left the state in 2022, representing 157,315 individuals. Compare that to just 77,147 returns filed for those entering the state in 2022, representing 112,138 individuals. 
• According to this latest data, Massachusetts experienced a net outmigration of 45,177 individuals the year the income surtax was enacted.

This trend has continued. In January this year, U-Haul released its annual Growth Index. United Van Lines released its 48th Annual National Movers Study the same week. Both reports painted a clear picture of an outmigration crisis in Massachusetts.  

• U-Haul ranked Massachusetts as the state with the second-worst population growth for the second year in a row. Only California has a more dire net loss in population than Massachusetts. 
• United Van Lines found that 53.0 percent of residents leaving Massachusetts earn $150,000 or more annually, which further disproves the notion that high-earners are not fleeing the state. A total of 73.9 percent of residents moving out of the Commonwealth earn $100,000 or more.

Problem #3: Survey Data Shows MA Tax Policy in 2025 is Driving People Out of the State

Actual data on taxpayers and their taxable income is not available yet for 2023, but additional survey evidence analyzing the years since Massachusetts enacted the income surtax show this trend has continued.

In January 2025, Mass Opportunity Alliance surveyed roughly 500 people who lived in Massachusetts in 2022 but have since left the state for Florida or New Hampshire. The state’s tax policy was the most-cited reason (70.7 percent selected) prompting people to leave Massachusetts – and the large majority were employed, not retired. The survey also indicated that those earning more than $1 million annually made up a disproportionately large share of those choosing to leave.

Following tax season for fiscal year 2024, the Massachusetts Society of CPAs (MassCPAs) raised concerns about the number of high-income clients changing their primary state of residence in its 2025 Public Policy and State Competitiveness Report. In the survey of nearly 200 certified public accountants (CPAs) representing around 4,600 clients with annual taxable income exceeding $1 million, a startling 70 percent of the CPAs had Massachusetts clients who changed their primary legal residence in 2024.

While advocates boast about the revenue raised by the surtax in recent years, this could be stunted long-term due to the outmigration crisis currently unfolding. In fact, a Boston University study found the loss of higher-income residents could end up costing the state nearly $1 billion in annual revenue by 2030. A 2024 study published in the American Economic Journal studying decades of state income tax introductions found that in recent decades, the eventual outmigration of residents to non-income tax states generally offset initial boosts to revenue collected under the income tax.

A review of the IPS report by the Tax Foundation points out another problem: The report doesn’t offer any national comparisons. In fact, the Tax Foundation finds Massachusetts’ 36 percent increase in federal tax returns for earners of one million dollars or more is actually much lower than the national average growth in this category (49 percent growth).

Massachusetts’ millionaire earner growth is actually dwarfed compared to lower-tax states, like Texas which saw millionaires grow by 61 percent, Arizona where millionaires grew by 75 percent, and Florida where millionaires grew 77 percent over the same 2018-2022 period.

Conclusion 

There is a plethora of data available to comment on the consequences for Massachusetts high-earners under the new income surtax – namely from the federal Internal Revenue Service. Instead of making claims about reality, IPS turned to an inappropriate source to find any data that fit its pro-surtax narrative. Wealth-X is measuring something completely different than what Massachusetts’ surtax applies to. The data that apply to Massachusetts taxpayers and their taxable income prove what residents and business owners have been saying all along: the surtax is driving people – and revenue – out of the state.