In his State of the State Address on Wednesday (Jan 8), Gov. Ned Lamont highlighted “affordability and opportunity” as top priorities. However, just three days later, freshman Rep. Nick Gauthier (D-Waterford) is already pushing to amend the state Constitution to include a so-called “Fair Share Amendment” — a fancy term for a millionaire’s tax.
The bill has yet to appear on the General Assembly’s website, but Rep. Gauthier wasted no time boasting about his proposal. In a Jan. 7 Facebook post, he proudly announced, “It’s submitted, my first bill!” and included a link to an explainer on the proposed amendment.
The proposal closely mirrors Massachusetts’ Fair Share Amendment, which took effect on January 1, 2023, following a narrow approval by voters in 2022. The measure slaps a 4% surtax on income exceeding $1 million, on top of the state’s existing income tax.
The tax revenue is earmarked for education and infrastructure, with state budget officials projecting to collect $2.4 billion in fiscal year 2026.
If Rep. Gauthier’s plan gains traction, Connecticut could be headed down the same path as states that currently have similar ‘tax the rich’ schemes, which have shown top earners moving out of those states — like Massachusetts.
The 2024 U-Haul Growth Index ranked Massachusetts as the second worst for growth for the second year in a row. U-Haul reported that 52% of one-way rentals were for people leaving the state, while only 48% were for those moving in. Back in 2022, Massachusetts was ranked the fourth worst, showing a steady decline in its appeal.
Connecticut, meanwhile, currently ranks 41 with 48.4% of U-Haul customers coming into the state and 51.6% leaving the state. This is slightly better than in 2023, when it ranked 42.
United Van Lines painted a similar picture, labeling Massachusetts a 2024 “top outbound” state. The moving company ranked it fifth worst in the nation, with 58% of moves involving residents packing up and leaving. 53% of outbound residents had yearly salaries of $150,000 or more.
According to the Tax Foundation’s Jan. 7 report, “Americans Moved to Low-Tax States in 2024,” U.S. Census data confirms these troubling migration trends for states like Massachusetts and Connecticut.
Tax Foundation — a nonpartisan tax policy organization — reports that the Census Bureau’s latest interstate migration estimates Massachusetts lost 0.6% of its population due to domestic migration between July 1, 2023, to June 30, 2024. The state ranked 45th nationwide, marking a consistent decline after ranking 44th in 2023 and 42nd in 2022.
Connecticut also struggles, ranking 40th with a 0.17% population loss. The state maintained its 40th-place ranking from 2023, a significant drop from 31st in 2022.
The Tax Foundation highlights “Interstate moving data shed light on an ongoing trend: Americans are continuing to leave high-tax, high-cost-of-living states in favor of lower-tax, lower-cost alternatives.”
Tax burdens appear to play a key role. Of the 26 states with overall state and local tax burdens below the national average of 11.2% in 2022 (the most current data available), 18 saw net inbound migration in FY 2024. Meanwhile, 17 of the 25 states and Washington, D.C., with tax burdens above the national average experienced net outbound migration. Massachusetts and Connecticut fall into this category, with tax burdens of 11.5% and 15.4%, respectively.
The Tax Foundation explains that taxes, while not the only factor, are significant, “For some Americans — especially higher-income and highly mobile individuals — tax differentials among states directly influence location decisions. More commonly, however, many individuals cite job opportunities, cost of living, family reasons, or lifestyle reasons for moving from one state to another.”
The group adds, “While taxes are far from the only factor affecting the cost of living or the job opportunities available in a state, they are an important factor, and they are one that is directly within policymakers’ control.”
Post-pandemic workplace flexibility has also intensified competition among states. The Tax Foundation notes, “In the post-pandemic era of increased remote and hybrid workplace flexibility, more Americans now enjoy the flexibility to live in a state of their preference while working for an employer located elsewhere.”
Some states have adapted by reforming their tax policies. “Many states have responded to this highly competitive landscape by reducing tax rates and improving tax structures in an effort to attract and retain individuals and employers,” the Tax Foundation explains.
They highlight examples of success: “In recent years, several states that recently had highly uncompetitive tax codes — like Iowa, Louisiana, and Arkansas — have taken significant steps to improve their tax structures and better compete with their lower-tax neighbors.”
Tax Foundation warns, “Other states — especially those that experience net outbound migration year after year — should consider following suit or risk falling behind simply by standing still.”
Massachusetts’ high state income taxes are reportedly hindering the New England Patriots and Boston Bruins in attracting top talent. Former Patriots head coach Bill Belichick highlighted this issue, noting that the state’s 5% income tax, coupled with a 4% surtax on earnings over $1 million, makes contract negotiations challenging. He pointed out that players and agents are acutely aware of the financial disadvantages compared to states like Florida, Texas, or Nevada, which have no state income tax.
Additionally, the Massachusetts Opportunity Alliance, a business coalition, argues that the Bruins are losing out on top talent to teams in no-income-tax states. They cite examples where players like Brad Marchand of the Bruins could have earned significantly more if they played elsewhere, with his potential earnings difference estimated at $365,700.
While Connecticut only has one major sports team, the Connecticut Sun, and doesn’t face the same recruiting challenges as Massachusetts, it has a much bigger issue to contend with: the rise of remote work. A millionaire’s tax won’t do the state any favors in attracting high-income workers, especially when they can easily stay put in their current state or relocate to a low- or no-income tax state.
Rep. Gauthier’s proposal may sound appealing to lawmakers eager to increase funding for public projects, but the evidence from neighboring states tells a different story. Massachusetts and New York are already cautionary tales, with wealthy residents fleeing in droves. Connecticut should learn from its neighbors before following the same failed policy. Instead of doubling down on taxing success, lawmakers should focus on fostering a competitive economic environment that attracts, rather than repels, job creators and high-income earners. Otherwise, Connecticut may find itself on the same sinking ship, watching its most productive residents head for greener pastures.
