Income tax cut ballot question would add to debate over revenue, behavior
BOSTON, NOV. 6, 2025….The question of high-earner flight got a careful response at the Massachusetts Investor Conference, where a top budget official said it’s too soon to know whether the state’s surtax on income over $1 million is driving wealthy residents out — though early revenues remain strong.
On a panel Wednesday before investors, Administration and Finance Secretary Matthew Gorzkowicz and Massachusetts Taxpayers Foundation President Doug Howgate weighed in on whether wealthy taxpayers are leaving Massachusetts in response to the surtax that votes added to the state constitution in 2022.
The 4% surtax on above-threshold income, which added to the state’s 5% income tax rate, generated approximately $2.46 billion in its first full year of collections. The revenue infusion is being poured into state education and transportation investments, but state officials are mindful about the potential for households that are paying the surtax to move out of state and about impacts of the tax on the state’s competitiveness.
Massachusetts has a wealth of attributes that make it attractive to residents and businesses, but affordability concerns and the high cost of living here are also major factors in the debate over mobility options.
Business groups are also trying to advance to the 2026 ballot a plan to cut the income tax rate to 4%, carving important revenue away from state government but enabling workers to keep more of their earnings. The tax cut supporters say it won’t cause a dramatic fall in revenues because it would be phased in over three years.
When asked what they’ve seen in terms of volatility and high earners moving out of the state — a common argument against the surtax — Gorzkowicz said Thursday that the state is still gathering data and cautioned against drawing conclusions.
“It’s a good question. It’s something that we’re monitoring very carefully,” he said.
“We’ve only got two full years of collections, and in fact, the FY 25 collections haven’t been fully certified … We only have one year’s worth of tax-collection data that we can review.”
Gorzkowicz later added, “From right now, we see that at least holding up for fiscal years ’24 and ’25, and we won’t see much of the difference in terms of the number of millionaires, and we do see some fluctuations based on wealth factors from year to year in terms of what payments look like. But for the most part, we’ve seen growth year after year.”
He emphasized the need to understand longer-term trends in high-earner residence and wealth patterns.
“We do see some fluctuations based on wealth factors from year to year in terms of what payments look like. But for the most part, we’ve seen growth year after year,” Gorzkowicz said.
Howgate echoed that view, saying the behavioral impacts of the tax will “play out over a number of years.” He said it will be important not just to track the surtax itself, but to compare overall income tax growth and to monitor whether underlying income evolves more slowly than expected — a possible signal of resident relocation or other behavioral change.
“The challenge with any of these things is a large number of folks who the tax applies to aren’t consistent millionaires, or the level of their millionaire-ness changes significantly from year to year, and so controlling for the economy and what that means is one thing we’ll be looking at,” Howgate said.
Gorzkowicz noted that while General Fund revenues have finished over-benchmark in recent years, it’s been largely due to the surtax and capital-gains windfalls, while underlying revenues remain “really tight.”
He said the administration is building conservatively around surtax proceeds to avoid budgeting errors given the uncertainty about future trends.
An Institute for Policy Studies study found that between 2022 and 2024 the number of Massachusetts residents with net worth over $1 million increased by nearly 39%, and the number with wealth over $50 million rose from roughly 1,954 to 2,642. By contrast, the pro-business Mass Opportunity Alliance contends in its survey of former Massachusetts residents that high tax burdens were a major reason for relocating and that high-income out-migration is real.
Against that backdrop, both panelists reiterated that the surtax is driving transformational investments.
Howgate highlighted work by the state’s Transportation Finance Task Force and said the model has shifted from “if you give us more money maybe we’ll make it better” to “we’re making meaningful improvements, and if you give us additional resources we’ll build on that.”
Gorzkowicz said the surtax helped stabilize the T and avoid a fiscal cliff.
While neither official offered conclusive evidence that high earners are or are not fleeing Massachusetts in large numbers, both noted the data is insufficient to make definitive judgments.
