Despite recurring warnings from some quarters, none of the available official data indicate that Massachusetts is in the midst of – or moving quickly toward – a crisis of population loss to other states. Some of the data – notably, the IRS migration data – do suggest that useful questions can be asked about who is leaving Massachusetts and why. Even these IRS data, however, do not suggest cause for immediate, grave concern. Moreover, other, more current data (from the U.S. Census Bureau) indicate that Massachusetts’s overall population grew very modestly in 2023, in large part due to people choosing to move to Massachusetts. In short, the picture that can be drawn from available official data is inconsistent, though in any case, it is not one of crisis.
Nevertheless, migration data often is used – and misused – to push an agenda of tax cuts for very high-income households, the ultrawealthy, and large corporations. Cutting such taxes, however, would do nothing to help most people who choose to leave Massachusetts. Instead, it would deprive the Commonwealth of much-needed revenue that otherwise could be used to address challenges that likely are a factor in some people’s decision to leave the state. To the extent that some households feel pushed to leave (rather than pulled by out-of-state opportunities), it is far more likely that cost-of-living issues are influencing their decisions than are concerns about taxes. For example, states with high housing costs also tend to have more people leaving than arriving from other states. Tax cuts would only make the Commonwealth less able to invest in quality, affordable housing, childcare, education, transportation and more – the things that matter to most families.
What do the newest data tell us?
To begin with, it is important to note that all the available data from the IRS and U.S. Census Bureau run at least 15 months – and often two or more years – behind the present. Consequently, we cannot say with certainty how things stand at present or for the last year or more. This limitation with the data is particularly challenging now, in the aftermath of the COVID pandemic. The pandemic altered migration patterns very significantly for several years. The most current data available describe Massachusetts during a period of post-pandemic rebound. Massachusetts, like many other states, is still rebounding from the COVID pandemic. It is quite possible that our current reality – for which we do not have data at present – differs meaningfully from that of 2021 and even from the first half of 2023. For example, IRS and Census data do not cover the current period when inflation has abated and new policies like free community college and the Fair Share tax on incomes over $1 million are in effect.
The most current data on Massachusetts’s overall population comes from the U.S. Census Bureau. It shows that during the 12-month period from July 2022 to July 2023 Massachusetts added some 18,700 people to its population, which includes a net gain from migration of 11,500 people (see figure, above). Compared with an overall population of just over 7 million people, this is a very small gain – about a quarter of one percent. Still, it is a gain not a loss.
Turning to the most recent IRS migration data (which compare tax filings for Tax Year 2020 with those of Tax Year 2021), we see that some 157,000 people departed Massachusetts during 2021.1 This figure includes people filing tax returns (single adults and married adults filing jointly) and their dependents (typically children). The large majority of that outflow, however, was offset by the arrival of 112,000 in-migrants – people of every age and income level. In other words, for every ten people who departed from Massachusetts in 2021, seven people chose to move to Massachusetts. The gap between the number of outmigrants and in-migrants resulted in a net loss of about 45,000 people or about two-thirds of one percent of the total Massachusetts population. A look at the details reveals a number of interesting facts:
- Over half (55 percent) of the people who left Massachusetts in 2021 were young people, age 26-45 years old. By contrast, less than 40 percent of all individuals from whom the IRS received tax filings for 2021 fall into this age group. So, these younger people are leaving at a higher rate than would be expected given their share of the population. Importantly, more than 8 out of 10 of these younger outmigrants had incomes below $200,000. This suggests strongly that calls for high-end tax cuts as a way to stem outmigration are misplaced. Instead, policymakers need to focus on the real challenges that many young people and young families face. These include reliable access to quality, affordable housing, childcare, education, transportation and more.
- Only 1-in-6 outmigrants in 2021 had incomes above $200,000. For this subset of higher-income outmigrants, the data show that their average household income was well below $1 million, and far below $1 million for individuals age 26-45. Again, tax cuts for very high-income households are not a policy prescription that aligns with the income demographics of Massachusetts outmigration.2
These statistics and others in the IRS migration data show that Massachusetts’s migration story is primarily one about lower- and middle-income households. Nevertheless, a good deal of the public discussion of the data has focused on migration of higher-income households, those with incomes above $200,000, a category that includes households with very high incomes. It is possible to learn a bit more about these very high-income households by turning to a different IRS dataset. The highest bracket broken out in this high-income IRS dataset is households with income above $1 million. Comparing the two most recent years of data shows that the number of Massachusetts households with million-plus incomes increased by 40 percent, growing from 22,840 households in 2020 to 32,050 households in 2021.3 Similarly, the number of households with income between $500,000 and $1 million grew by just under 30 percent.
Though the IRS’s high-income dataset does not track the number of households departing from or moving to Massachusetts, it does show that Massachusetts is growing its population of very high-income households quickly, one way or another. This could be the result of such households moving to Massachusetts or a state economy that is generating significant numbers of millionaires – or, most likely, a combination of the two.
What do the longer data trends tell us?
Recognizing that IRS migration numbers (as well as numbers from other sources) can bounce around considerably from year-to-year,4 a recent report from the Center on Budget and Policy Priorities (CBPP) looks at 10-year averages (2011-2021). This approach reveals the longer-term migration trends among states and for the nation as a whole. Several of the takeaways at the national level from the CBPP report include:
- “Large numbers of households — including high-income households — move into higher-tax states every year.” In other words, people at all income levels are moving for many reasons unrelated to taxes.
- “The vast majority of interstate moves are from one low-tax state to another and one higher-tax state to another.” Again, taxes are not a driving factor for most individuals choosing to relocate.
- “Achieving net in-migration does not guarantee state prosperity, and experiencing net out-migration does not doom a state to poor economic performance.” What matters is whether a state’s economy is raising standards of living for large swaths of the current and incoming population. A narrow fixation on ever-fluctuating migration numbers will not serve policymakers well as they try to chart a course toward broadly shared prosperity for the people of the Commonwealth.
The CBPP report also takes a more detailed look at state-level data over this ten-year period. The CBPP analysis shows that Massachusetts often performs quite well compared to other states. In fact, Massachusetts migration numbers compare favorably to several states that do not levy an income tax and which often are cited as primary destinations for outmigrants from Massachusetts. For example:
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- Massachusetts had a lower outmigration rate (3.1 percent) for households with incomes below $200,000 than 30 other states did, including all but one (Texas) of the seven states that have no income tax.
- Massachusetts had a lower outmigration rate (2.4 percent) for households with incomes above $200,000 than 38 other states did, including all but two (Texas and South Dakota) of the seven states that have no income tax (see chart, below).
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- On average, each year Massachusetts replaces 83 percent of its outmigrants with in-migrants. While there invariably will be people who choose to move out of state, Massachusetts also attracts a significant number of people of all ages and incomes.
- Looking only at high-income households (those with incomes above $200,000), the replacement rate is 78 percent. In other words, for every five high-income households that depart, four other high-income households find reasons to move to Massachusetts.
- Replacement rates for Massachusetts from states with no income tax also are high. Two out of every three people who moves from Massachusetts to Florida or New Hampshire are replaced by someone moving from Florida or New Hampshire to Massachusetts. Replacements rates are higher still from other no-income-tax states such as Tennessee (73 percent), Texas (74 percent), and Nevada (79 percent).
- Massachusetts had higher median household income growth than all but 7 other states. Massachusetts outpaced Florida, Texas, New Hampshire, and all other no-income tax states, often by a very wide margin (see figure, below). In terms of income growth, Massachusetts is performing better for many of its workers than are most other states (see chart, below)
Conclusion
Currently available data do not support the idea that Massachusetts is facing a crisis of outmigration. It will be worthwhile, however, to monitor new IRS and Census data over the coming several years to see if and how migration patterns change as we move beyond the years most heavily impacted by the COVID pandemic. If we continue to see a pattern of modest net outmigration from Massachusetts, policymakers can decide how best to address the issue, targeting real problems with real solutions. Based on the current data, however, calls to cut taxes for very high-income households, the ultrawealthy, and big corporations are misguided. Such tax cuts would reduce the Commonwealth’s ability to respond to challenges faced by working families in Massachusetts. This is more likely to increase outmigration than reduce it.
Endnotes
1 Due to certain limitations and quirks in the IRS’s migration data, the IRS data may not reflect precisely the actual number of migrants in a given year. Not all moves are counted by the IRS, nor are all moves assigned to the calendar year in which the move took place. Like most users of the data, however, we ignore these quirks and work with the data as presented by the IRS.
2 The IRS 2021 – 2022 migration data cover a period before the new Massachusetts surtax on the portion of income above $1 million impacted the amount of tax filers owed. The surtax applies only to Tax Years 2023 and beyond. Nevertheless, some have suggested high-income households departed in advance of the surtax going into effect. The IRS data, however, indicate that few Tax Year 2021 outmigrant households had income above $1 million.
3 These million-plus dollar income households comprise less than 1 percent of all filing units in the Commonwealth, but they claim an outsized share of Massachusetts’s total household income. The share of income they claim rose from 21 percent in 2020 to 30 percent in 2021.
4 Mazerov, Michael, Center on Budget and Policy Priorities, “State Taxes Have a Minimal Impact on People’s Moves”, August 9, 2023 (See Appendix B)
