CNHI NEWS: Tax critics dispute wealth growth claims

By Christian M. Wade, Statehouse Reporter
This piece originally appeared in CNHI News on May 5, 2025.

BOSTON — Critics of the millionaires’ tax are disputing a recent study purporting to show the number of affluent families in Massachusetts is rising along with their wealth, calling the claims misleading. 

A recent report by the left-leaning Institute for Policy Studies claimed the number of millionaires in Massachusetts grew “substantially” over the past two years, even as high-income earners began paying the 4% so-called Fair Share tax on annual income above $1 million.

The group, which is advocating for wealth taxes in other states, also cited Internal Revenue Service data to back claims that the collective wealth of the state’s top earners is increasing.

But the Tax Foundation, a right-leaning Washington, D.C.-based think-tank, is pouring cold water on the group’s report, accusing it of putting out misleading data to back a push for more wealth taxes. 

In a blog post, Jared Walczak, the foundation’s vice president of state projects, point out that the data in the IPS report showing that the number of individuals earning $1 million or more in the state was based on IRS data from 2018 to 2022, a year before the millionaires tax went into effect.

He said the IPS study also “provides no baseline, never comparing these high-tax states against national averages, let alone the performance of notably low-tax states.”

“To do so, of course, would have obliterated the study’s thesis,” Walczak said. “Even with the years and states the Institute for Policy Studies chose, the data show exactly what we would expect: higher taxes suppress economic growth.”

The foundation said the latest IRS data shows the number of Massachusetts residents with adjusted gross income of more than $1 million declined the year of the law was passed, and that the outmigration of top earners has continued.

To be sure, the IPS report acknowledged that IRS data on the number of Massachusetts taxpayers reporting incomes of $1 million or more wasn’t available for 2023. But the group cited research from Altrata, a New York-based research firm that tracks the rich through its Wealth-X unit, that the state’s top earners have increased since the millionaires’ tax went into effect.

The institute, which looked at Washington and other states with wealth taxes, also pointed to research showing that high-net worth individuals “tend to be less mobile and exhibit lower rates of migration compared to the general public.”

“Their family, business, and social networks deeply root them to amenity rich locales, thus higher income taxes do not compel the overwhelming majority of millionaires to move across state lines,” the report’s authors wrote.

Beacon Hill has wrangled over the issue of outmigration for several years amid warnings from pro-business groups and some economists that the state’s high tax burden and cost of doing business is hurting its competitiveness.

Gov. Maura Healey and legislative leaders have focused on boosting the state’s competitiveness in response to previous reports showing an exodus of people from the state in recent years. Healey argues that a lack of housing, among other factors, is impacting the state’s ability to attract and maintain businesses and families.

The Mass Opportunity Alliance, which includes the Massachusetts High Technology Council, Massachusetts Competitive Partnership, and the Pioneer Institute, argues that the tax is hurting the state’s competitiveness by siphoning away money from job creators and driving wealthy families to other lower tax states like New Hampshire and Florida.

“No flawed study can obscure the truth: Massachusetts’ high tax burden—now worsened by the surtax — is driving residents out, along with their tax dollars and talent,” said HighTech Council President Chris Anderson. “Clinging to false narratives only prolongs the bad policies that have raised costs, hiked taxes, and pushed families and businesses to the brink.”

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com.