New Council A Good First Step To Improve Massachusetts’ Competitiveness

Everyone’s talking about it: the Commonwealth is losing its competitive edge. Governor Maura Healey just announced a new initiative focused on finding out why.

On Wednesday, Governor Healey announced the state is creating an “Advisory Council on Competitiveness,” which will include local business groups, state Cabinet secretaries for economy-related agencies, and legislative appointees, among others. The Governor stated the aim of the Council is to find ways “to grow Massachusetts’ economic leadership and make us more competitive.”

The announcement comes on the heels of heightened concern in the media about the state of Massachusetts’ economy. In recent months, the editorial boards at three Massachusetts newspapers have raised alarms, offering sharp takes on the challenges making it harder for our state to attract and retain businesses and residents alike.

Consider The Boston Globe, which noted that despite scoring a win with Hasbro, “the bigger picture is grim.” Or The Boston Business Journal, which aptly described recent downturns in the state’s cornerstone biotech industry as “a flashing red light on the dashboard of the Massachusetts economy.” Now, this week, The Lowell Sun argued that the Commonwealth needs to “reboot [its] listless economy.”

MOA research and public polling show that these warnings about the dire state of our economy aren’t just media hype – they’re real. Let’s take a closer look.

FACT: Massachusetts is one of the most expensive states to do business.

According to CNBC’s 2025 “Top States for Business” ranking, the Commonwealth has the second-highest cost of doing business in the country, behind only Hawaii. That includes the highest wage expenses, third-highest utility fees, and some of the steepest commercial and industrial property costs in the nation.

The state also imposes heavy business taxes. According to the Tax Foundation, we have some of the highest corporate income taxes in the US, even after lowering the rate to 8% in 2012. Compare that to competitor states like New Hampshire and North Carolina, which offer lower rates of 7.25% and 2.25%, respectively.

Two tax hikes for businesses could also be on the horizon.

First, Massachusetts currently taxes businesses’ offshore income, also known as “global intangible low-taxed income” or “GILTI.” Policymakers are currently considering a pair of proposals to expand the amount of income that can be taxed by GILTI, making the tax burden even heavier for companies operating in Massachusetts.

Then there is Massachusetts’ unemployment insurance (UI) tax burden, which is also among the highest in the nation. The Commonwealth has the highest range of employer UI tax rates, which comes out to taxing the average employer 2.84% of their employees’ taxable wages to fund its unemployment trust fund—a rate several times higher than the average in competitor states.

That trust fund is running out and now faces a $2.1 billion dollar debt payment to the federal government, which may ultimately lead to even higher business taxes.

FACT: High cost of living makes Massachusetts less attractive for people to live here.

High costs aren’t confined to the business world—they are hurting residents, too.

Local inflation has risen nearly 47% since 2010. Taxes facing residents, such as individual income and sales taxes, are higher here than many other states. The public agrees: in a MOA survey of Massachusetts voters, the vast majority said their taxes are too high. Many believe these factors are pushing students who attend college in Massachusetts to leave after graduation.

Housing costs have also skyrocketed, placing Massachusetts among the last in the nation for housing affordability in rankings by Realtor.com. According to the Tax Foundation, Massachusetts has higher property taxes than many other state and has an estate tax, which competitor states like New Hampshire and North Carolina don’t impose on property owners.

A recent poll of Massachusetts voters finds reducing the cost of living is a top concern for people living here, and three-fourths believe it’s causing people to move elsewhere.

Evidence shows this outmigration is already underway. Massachusetts saw a net loss of over 45,000 residents in 2022, according to the latest available data from the Internal Revenue Service, one of the worst years of net outmigration experienced over the last decade. In a survey of former Massachusetts residents who moved to competitor states Florida and New Hampshire, two-thirds said they left primarily because the cost of living was too high.

FACT: Other states are growing while Massachusetts is stagnating or declining.

Thanks to factors like a lackluster business climate and the soaring cost of living, the state’s private sector workforce is showing signs of decline.

Data released by the Bureau of Labor Statistics through the first quarter of 2025 paints a bleak picture. Employment numbers are still below pre-COVID levels. Worse, Massachusetts has lost private sector jobs while our neighbors and competitor states have continued to grow.

Case in point: states like Florida, North Carolina, and New Hampshire have increased year-over-year private sector employment in nearly all of the last twelve months. In contrast, Massachusetts saw lower monthly job levels in 10 of the last 12 months compared to last year.

Other signs of economic stagnation are becoming increasingly clear. According to a study by Pioneer Institute, several key private industries have suffered significant losses.

Manufacturing, for example, has shed roughly 6% of jobs over the last five years. And the professional, scientific, and technical services industry has lost nearly 4% of jobs since peaking in 2022, including over 1,000 biotech jobs in the last year alone. .

FACT: There is already a blueprint to restore Massachusetts’ competitiveness.

The Governor’s advisory council shining a spotlight on the Commonwealth’s competitiveness concerns is a good first step to solving them. However, we don’t need a completely new plan to revitalize our economy – a blueprint already exists.

After the economic stagnation of the 1970s and 80s, the state reversed course by lowering taxes for residents and businesses. Massachusetts went on to adopt a strategy of fiscal restraint that ensured that tax dollars were efficiently allocated to essential services for taxpayers. Fast forward to roughly a decade ago: Massachusetts’ businesses were thriving while the state led the nation in education, innovation, and economic growth. 

The state should again embrace tried-and-true strategies proven to provide tax relief for individuals and businesses, while also stimulating the economy. These include:

• Reducing individual income tax rate to alleviate high tax burdens;
• Fixing the state’s revenue cap to ensure excess tax collections are returned to taxpayers;
• Preventing the state from increasing its taxes on some Massachusetts companies with international income, which would make us more of an outlier on business tax burdens.

With the economy making headlines for all the wrong reasons, state lawmakers have a choice: continue down this current path or take proven steps to make Massachusetts competitive again.