Is the Massachusetts Millionaires Tax Backfiring?

The arguments for and against the so-called Massachusetts Millionaires Tax, or “Fair Share Amendment,” were simple. Supporters of the four percent surtax on incomes exceeding $1 million said it would force the wealthy to pay their fair share. Opponents called it income class warfare and said it would cause the well-to-do and the jobs they create to flee to other, more business-friendly states.

The jury is still out on the impact of the tax, which generated roughly $2.46 billion in its first full year of collections.

State House News Service (SHNS) recently reported on a panel discussion in which “Administration and Finance Secretary Matthew Gorzkowitz and Massachusetts Taxpayers Foundation President Doug Howgate weighed in on whether wealthy taxpayers are leaving Massachusetts in response to the surtax that voters added to the state constitution in 2022.”

Those who are watching and waiting to see what impact the new tax will have are concerned about the state’s competitiveness. SHNS reported that “Affordability concerns and the high cost of living here are also major factors in the debate over mobility options.”

All of this as business groups and others are attempting to lower the income tax rate to four percent, an idea that may appear on the November 2026 ballot.

Gorzkowicz told the panel group that the state is still gathering data on the potential for high earners to flee from Massachusetts and has yet to reach any conclusions.

“It’s a good question. It’s something that we’re monitoring very carefully,” Gorzowicz reportedly told the meeting.

The Massachusetts “millionaires tax” is a four percent surtax on annual taxable income that exceeds a specific threshold (indexed for inflation), which is applied in addition to the state’s standard five percent flat income tax rate.