Healey opened the door to tweaking the ‘millionaires tax.’ Now what?

Jim Stergios — executive director of the right-leaning Pioneer Institute that opposed the millionaires tax — was thisclose to issuing a press release praising Healey. Then reality set in.

The next day the governor — who as a then-candidate supported the Fair Share Amendment ballot initiative that created the millionaires tax — clarified her thoughts, telling State House News Service that she still supports the tax that has raised over $2 billion annually to fund education and transportation and would not want it repealed.

Now if you were in the audience, as I was, Healey came across as someone who has been getting an earful from business leaders about the impact of the tax — hearing that entrepreneurs might not want to start their businesses here, companies are having a hard time recruiting senior executives, and wealthy individuals are uprooting to Florida, New Hampshire, and other states without income taxes.

And while Healey did not give a full-throttled rejection of the millionaires tax, she was doing what any good leader should do: Listen, take notes, and review what’s not working.

“I’m going to look at ways to lower costs, including what other tax reforms are necessary,” she said. “I want Massachusetts to be a place where people are attracted to come and grow, and make money and succeed and do well. So I think we need to be open to that, to be open to looking at what we need to do within our existing tax regime that will make us more conducive to that.”

Anyone who has followed the millionaires tax debate knows that, for the business community, this is what counts as a victory, after 52 percent of voters approved the tax by a clear margin in 2022.

And during the seven-year push to get the millionaires tax on the ballot, its pros and cons have been well litigated, both in court and in the court of public opinion. Voters approved the tax because they want better schools and a functioning T, and now that billions of dollars in new tax money is flowing, it’s hard to see Beacon Hill giving it up. Nothing gives lawmakers more joy than squabbling over a windfall.

But what the opposition is saying now is that an idea that was conceived before the pandemic feels more ill-conceived today.

“We need to recognize that the millionaires tax was a concept that was put forward in far different economic time,” said Jay Ash, CEO of the Massachusetts Competitive Partnership, whose business group opposed the tax. “COVID made the world much smaller ... now everyone can operate from anywhere.”

Employees and companies have choices they may not have a few years ago. Between the high cost of doing business and a broken housing market, the case for being in Massachusetts isn’t as strong as it once was. To make matters worse, the Trump administration seems intent on blowing up the state’s economy, jeopardizing billions of dollars in federal research grants and revoking visas for international students.

I don’t see business leaders marching in the streets demanding a repeal of the millionaires tax. They’re smarter than that. Rather, they’re playing the long game: organizing themselves, commissioning reports, and trumpeting statistics that support their cause in hopes that one day, the data will create political will to undo the tax.

Here’s one data point Pioneer Institute‘s Stergios is particularly alarmed by: According to the Bureau of Labor Statistics, there are 24,100 fewer private sector jobs in Massachusetts than there were in early 2020, while states like Florida, Texas, and North Carolina have seen jobs grow steadily over that time.

Had the Massachusetts private sector created 250,000 jobs during that period like North Carolina did, we would have generated an additional $1.3 billion in state income and sales tax revenue, according to Pioneer Institute analysis.

John T. C. Lee, CEO of MKS Inc. and chair of the Massachusetts High Technology Council, says he knows a few people who’ve moved away to avoid the millionaires tax. He’s also seen the surtax hurt recruiting, with a couple of job candidates deciding not to work at MKS, an Andover company that supplies equipment and components to computer chip makers.

“Whether it’s revisiting, repealing, whatever, I think it is worth looking at the data,” said Lee. “The best thing is that we look at the facts, and the facts steer us towards one direction or another.”

Data will be key, and so far it’s all too early to weigh the benefits of the millionaires tax against the costs, says Evan Horowitz, executive director of Tufts University’s Center for State Policy Analysis. He posits that we won’t know for a few years how many high earners decide to move out of the state, or how many can get their tax accountants to work their magic to avoid the surcharge.

Meanwhile, any effort to repeal the tax would take years, requiring an amendment to the state constitution and votes by two successive Legislatures, followed by a citizen ballot question. And it would clearly draw a fight from powerful labor groups, who outspent the business community the first time around.

Another option: lower the base income tax rate for everyone to something below 5 percent. That’d be a tough sell to Beacon Hill because income taxes are the primary source of revenue for the state budget.

The bottom line: Repealing the millionaires tax isn’t on the table yet, but make no mistake the push to chip away at it has already begun.

Shirley Leung is a Business columnist and host of the Globe Opinion podcast “Say More with Shirley Leung.” Find the podcast on Apple, Spotify, and globe.com/saymore. Follow her on Threads @shirley02186

Shirley Leung is a Business columnist. She can be reached at [email protected].