With majority reports out of the legislature’s Taxation Committee, a number of bills are on their way to the floor to raise taxes on the wealthiest individuals and corporations. These bills are good policy and good politics, with overwhelming public support for tax fairness measures. But that doesn’t stop some from bringing tired arguments against these bills, such as the notion that wealthy families will move out of state to avoid small tax increases that benefit their communities. Recent studies, data, and testimony say the opposite is true.
We can find answers in the nation-wide data
In their extensive report on the impact of tax policy on interstate movement, the Center on Budget Policy and Priorities shows that the available evidence “fails to support claims that much interstate migration is driven by high-income people — or anyone else — moving because of taxes.” In this report Michael Mazerov breaks down Census and IRS data to show people move mostly for jobs or family. When people do move, large numbers of high-income households move into higher-tax states every year. He also found that the opposite argument, that tax cuts would help draw people in, doesn’t hold water either.1
These conclusions are mirrored in other reports as well, like a recent look at New York state migration by the Fiscal Policy Institute that found “There is no statistically significant evidence of tax migration out of New York” despite having the second highest top individual income tax rates.2 But we also have data closer to home based on more recent changes.
Facts in Massachusetts tell a clear story
In 2022, Massachusetts voted to amend its constitution to create a 4% surtax on income over $1 million. Proponents of the measure said it would ensure funding for investments in schools and infrastructure. Opponents argued it would lead to an exodus of millionaires. With more than two years of data, the result is clear. Massachusetts has brought in over two billion dollars in funding (nearly double the expected amount) for transportation infrastructure and education, leading to safer roads and bridges and a brighter future for students. On the other hand, doomsday scenarios about millionaires fleeing Massachusetts haven’t come to pass. In fact, news outlets in New England have reported a dramatic jump in millionaires, citing a 38.6% increase.3
Here in Maine, the Taxation Committee amended Rep. Golek’s LD 1089 to raise taxes on income over one million dollars by half as much as the referendum in Massachusetts. This and other tax fairness bills are opportunities to fund important priorities like schools and nursing homes while also making our tax code fairer. With new data showing the failure of opposition arguments, there is no reason for the legislature not to act.
The fearmongering about “tax flight” is not only outdated — it’s been disproven again and again. Wealthy people aren’t fleeing — they’re thriving in higher-tax states with strong public investments. Meanwhile, communities in those states are reaping the benefits: better schools, better roads, better futures. Maine now has a clear choice. We can keep listening to recycled myths designed to protect the wealthy few, or we can choose facts, fairness, and a better future for everyone.
Notes
[2] https://fiscalpolicy.org/wp-content/uploads/2023/12/FPI-Who-is-Leaving-Full-Report-Dec-2023.pdf
[3] https://ips-dc.org/report-wealth-expands-after-higher-state-taxes-on-high-income-earners
