The absence of a state income tax has long drawn Massachusetts residents to New Hampshire. But the combination of a push to amend the Massachusetts Constitution and a lawsuit the Granite State filed last fall against its neighbors to the south could turn a steady drip into a flood.

A recent Pioneer Institute analysis of Internal Revenue Service data found that, between 1993 and 2018, Massachusetts experienced a net outflow of $5.4 billion in adjusted gross income to New Hampshire.  Before the pandemic, 15 percent of New Hampshire’s workforce commuted to the Bay State.

Then COVID hit. Last spring, Massachusetts enacted a temporary, emergency regulation subjecting nonresidents employed by Bay State companies to state income taxes, even if their work is performed outside Massachusetts. The regulation was later made permanent.

For decades, states have required only workers physically present in a state to pay that state’s income taxes.  New Hampshire sued Massachusetts, relying on the US Supreme Court’s original jurisdiction over disputes between states and claiming that the regulation amounts to taxation without representation. New Hampshire asked that the court require Massachusetts to refund taxes collected from residents living and working in the Granite State.

Meanwhile, advocates in Massachusetts are pushing for a state constitutional amendment that would allow a graduated state income tax and add a 4 percent surtax to all annual income above $1 million.  This year, the measure will for the second time go before both branches of the legislature in a constitutional convention.  If they once again approve it, it will go before voters on the statewide ballot next year.

With billions of dollars already migrating to New Hampshire under the Commonwealth’s current 5 percent income tax, imagine the wealth drain that would ensue were Massachusetts to adopt a top rate of 9 percent.  A Supreme Court ruling that high earners working for Massachusetts companies can avoid Bay State income taxes simply by working remotely from New Hampshire would be akin to the Commonwealth offering a relocation bonus to persuade wealthy residents — and the tax revenue they contribute — to leave.

If the movement of more than $200 million annually from Massachusetts to New Hampshire isn’t enough to convince you that people and businesses weigh tax and business climate issues when deciding where to locate, consider the Bay State’s wealth drain to Florida.  Over the same 1993-2018 period that Massachusetts lost $5.4 billion to New Hampshire, it hemorrhaged nearly $10 billion – or $400 million a year – to Florida, another no-income-tax state.

The one-two punch of the Supreme Court case and enacting a surtax on high earners could be devastating to Massachusetts.  The prospect of moving over the border to New Hampshire to avoid all state income taxes while continuing in their current jobs will be too much for many current Massachusetts residents to resist.

A Supreme Court ruling for New Hampshire would liberate many state residents from Massachusetts income taxes and potentially require the Bay State to refund what those Granite State residents have already paid.  For southern New Hampshire residents generally, it would mean an accelerated influx of Massachusetts exiles, many of them affluent, which would be very good news for state coffers.

New Hampshire’s status as a no-income-tax state has long been an enticement for Massachusetts residents.  The Bay State may pay dearly for self-inflicted wounds like hiking taxes on high earners and overreaching to subject Granite State residents to its taxes.  If it does, New Hampshire will be the biggest beneficiary.

Jim Stergios is executive director of Pioneer Institute, a Boston-based think tank. Christopher Anderson is president of the Massachusetts High Technology Council. They wrote this for NHJournal.