Last October, I shared a table showing how various states have risen or declined as measured by the Tax Foundation’s State Tax Competitiveness Index.

Washington easily stands out as the state that has gone downhill by the greatest amount, and you read about that state’s most-recent attempt to commit economic suicide by clicking here and here.

For today’s column, let’s focus on Massachusetts, another state that has suffered a big decline.

Why look at that state? Because we can learn an important lesson about the downside of class-warfare tax policy.

The bulk of the Bay State’s decline occurred between 2022 and 2023 because voters approved a referendum to eviscerate the state’s flat tax by adding a new top tax rate of 9 percent.

Let’s look at the effect of that decision.

Gayla Cawley explained last month for the Boston Herald that people are now leaving the state. Here are some excerpts.

People are fleeing high-tax Massachusetts at a much higher rate than those moving to the Bay State, resulting in a net domestic out-migration of 182,145 over the past five years… Massachusetts is one of four states that has yet to recover its pre-2020 private sector employment. Over the same period, the number of workers and firms have grown dramatically in competitor states like Florida, Texas and North Carolina… Many of the residents leaving drive the state’s economy, such as families, recent graduates and mid-career workers, leading to what Stergios and Anderson call a “brain drain” of “talented workers” that could further hamper competitiveness.

Cawley’s column cites a report from the Pioneer Institute.

And that report includes this sobering chart about Massachusetts being near the bottom for private-sector job creation.

In a report last week for Bloomberg, Greg Ryan takes a different perspective.

Instead of focusing on people or jobs, he looks at what’s been happening to money. Here are some key passages.

Residents exiting Massachusetts took a net of $4.2 billion in adjusted gross income with them in 2023, one of the largest totals in the country, after a tax on millionaires took effect. …This was the first year that residents were subject to a 4% surtax on incomes over $1 million after voters approved the levy in 2022… Supporters of the Massachusetts measure hail the more than $6 billion in revenue it’s brought to state coffers. Critics warn that it’s driving away entrepreneurs… The level of income leaving the state remained significantly higher than it was pre-pandemic… The wealthy now make up a larger share of defections from Massachusetts. The top earners were responsible for 70% of the $4.2 billion in net outflows in 2023, a jump from the previous year and more than double the level from 2019.

Here’s a chart from the story and it definitely appears that the exodus of income accelerated as the referendum became an issue.

Let’s close with some excerpts from a Washington Post column by two Massachusetts residents, Jim Stergios and Christopher Anderson.

…the economy in Massachusetts was growing. In 2016 its economy saw growth as high as 3.7 percent, above the national average. But high taxes coupled with rapidly growing state spending have eroded the state’s competitiveness. Since 2018, the state budget has increased by more than 50 percent — far outpacing inflation or family income growth. CNBC now ranks us 49th in the cost of doing business. The Tax Foundation’s 2026 State Tax Competitiveness Index ranked Massachusetts 43rd overall. …Now, the state is losing residents to more affordable states like New Hampshire and Florida. In 2024, net out-migration was more than seven times larger than in 2010. …It’s not only retirees or the ultra-wealthy who are calling it quits. …The “brain drain” of talented workers means the economic dynamism from start-ups and other innovative companies that historically boosted our state’s economy will dry up.

The most important part of their column, in my not-so-humble opinion, is when they make the connection between excessive government spending and bad tax policy.

That’s a point I’ve made when writing about nations such as Belgium and Brazil. The same lesson applies to state governments.

Which is why every state in the U.S. needs to copy Colorado and enact a meaningful spending cap (and why every nation should copy Switzerland for the same reason).

P.S. Since our left-leaning friends are motivated in part by envy, a spending cap doesn’t guarantee good tax policy, but it certainly makes it less likely.