In many conversations with local business leaders, the question of whether Massachusetts is losing its economic appeal comes up repeatedly. Over the past 40 years, Massachusetts has been a leader in technology and financial industries, with a highly educated and skilled workforce. However, complacency with the status quo is a significant risk. A new report by the Massachusetts Taxpayers Foundation highlights the strong headwinds facing the state and paints a worrying picture. The report is concerned about the approval of “millionaire tax” in November, which has brought to the fore the issue of the state’s economic competitiveness.
Opposing points of view on the issue of economic competitiveness are largely broken down by fiscal conservatives and progressives. Fiscal conservatives claim that the new tax, which imposes a 4-percent levy on incomes over $1 million, will force other states to lose people, jobs, and wealth, while progressives counter that the losses are minimal and more than offset by additional policies. The income generated by the millionaire tax will be used for much-needed investments in education and transportation. The state has a wealth of research and data to choose from to support their position.
The Massachusetts Taxpayers Foundation has its own (mostly business-leaning) agenda. He warns that the millionaire tax will hurt the state’s business environment and help other states will benefit from short-term capital gains and inheritance tax cuts, along with measures to help seniors, renters and low-income families. However, their latest report highlights all the challenges facing the state. On housing costs, Massachusetts’ apartment vacancy rate will be the lowest in the nation at 2.8 percent in 2022.
The state lost 57,300 residents from April 2020 to July 2022, and losses of this magnitude have happened before. It has decreased by about 100,000 since June 2019. Massachusetts ranks fifth in the nation with 43.4 computer/mathematics jobs per 1,000 jobs, but the state lost 2,200 jobs in computer systems design and related services between March 2020 and March 2023. Texas added 77,000 jobs and Florida added 31,000 jobs.
Doug Howgate, president of the Massachusetts Taxpayers Foundation, said that the state is facing a larger demographic trend. He said focusing on policies “at the heart of Massachusetts’ success” is necessary, including more labor, better transportation, more housing, helping families get childcare, and tax cuts. These policies will cost the state, but the alternative of losing people, jobs, and wealth would be even more costly.
Larry Edelman can be reached at email@example.com. Follow him on Twitter @GlobeNewsEd.