Is Bill Belichick right about what’s going on in ‘Taxachusetts’?

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Massachusetts has been nicknamed “Taxachusetts” since the 1970s due to the perception of high state taxes, particularly during that era. The term became popular in response to a combination of high income, property and sales taxes that many residents and critics considered excessive compared to other states. The nickname reflected frustrations with the state’s tax policies and was often used in political rhetoric to argue for tax reforms and cuts.

Although Massachusetts has since implemented tax reforms, the nickname historically referred to the state’s once-large tax burden. Entrepreneur Kevin O’Leary recently mentioned this in an interview with Fox News, saying, “I left Massachusetts and moved to Florida, and most of my neighbors where I live are from my hometown of Boston. We can’t afford to live there anymore. “

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It’s not just the O’Leary feud over the Taxachusetts name. Bill Belichick, who coached the New England Patriots to six Super Bowl victories, recently named the state of Taxachusetts as he weighed the impact of a tax rule he says could prevent the state from attracting top sports talent.

For 2023, the state introduced what was called the millionaire’s tax, a 4% surtax on taxable income over $1,000,000. The tax bracket will increase each year, keeping pace with inflation. The tax generated $2.2 billion in fiscal year 2024 for the state, drawing revenue from CEOs, professional athletes and other high net worth individuals. In addition to this tax, the state also has the fifth highest property tax in the country.

On the Pat McAfee Show, Belichick said the tax could hinder local teams’ ability to attract top players because nearly every player, even those on the practice squad, could be close to paying the tax. “It’s just another thing you have to deal with in the negotiations there,” he said. “It’s not like Tennessee or Florida or Nevada or some of these teams have no state income tax. So you get hit pretty hard with agencies. They’re going to come and sledgehammer you about the taxes they pay.”

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Belichick isn’t the only sports person weighing in on the tax’s impact. Former Bain Capital and Boston Celtics co-owner Steve Pagliuca left Massachusetts for Florida last year, selling his home for $8.8 million. Pagliuca said the tax was not a factor in his move. He left because he retired from Bain Capital and was already living mostly in West Palm Beach. Pagliuca told the Boston Business Journal that taxes play a role in recruitment, saying that “punitive tax measures” can make it more attractive for high-income earners to move to lower-tax states.

In a story on the tax for NPR, Evan Horowitz of the Center for Public Policy Analysis at Tufts University said that people in the million-plus tax bracket are likely to change their behavior, either by leaving the state or by becoming more creative in hiding his money. It may take a few years to see if the tax drives high earners out of the state. A study by Boston University’s Questrom School of Business estimated that the state could lose $1 billion in tax revenue by 2030 if current migration trends continue. For some high earners, it seems, including former Patriots star Tom Brady, Florida is the place to be.

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