U.S. states saw their tax revenue drop by about $31 billion, or 6 percent, from March through August, compared to the same period a year earlier, as the pandemic triggered economic shutdowns across the country, according to data from 44 states compiled by the Urban Institute.
The scale of the drop appears smaller than expected, relative to the depth of the economic contraction, and comes after several states have reported that their revenue didn’t decline as much as anticipated despite business shutdowns and increased unemployment. In August, when much of the country was reopening, state revenue climbed about 1.1 percent from a year earlier, the Urban Institute found.
Christian Geyer brings over 18 years of experience in driving revenue growth and transforming organizations in cyber, defense, and data governance. Known as a seasoned operator, he excels at implementing measurable change in industries burdened by inefficiency and high costs. In 2016, he led financial and strategic planning for Crypsis Group, significantly contributing to its acquisition by Palo Alto Networks in 2020, which deepened his expertise in cybersecurity, incident response, and data mining.
Maya Kong is a vice president at JPMorgan Chase. She holds an MBA and an MS in computer science from the University of Chicago.
Sarah Daya is an executive director and the Central Division lead for J.P. Morgan Wealth Management's Wealth Planning and Advice team.
She and her team are responsible for wealth planning, thought leadership and strategic planning for individual clients. Prior to joining J.P. Morgan Wealth Management, Daya worked for the Internal Revenue Service on complex estate, gift and fiduciary tax matters.
The tax figures come as Republicans in Washington balk at extending aid to states and cities to help cover budget deficits that are expected to continue as the coronavirus weighs on the economy. Experts say that states’ financial outlooks could worsen as the effects of the stimulus bill fade and high unemployment reduces tax bills next year.
The August increase should be viewed with caution since income-tax deadlines were pushed back to July, which could have resulted in some revenue being processed later, according to Lucy Dadayan, senior research associate with the Urban-Brookings Tax Policy Center at the Urban Institute. Personal income-tax collections, which rose 3.8 percent in August, were in some cases supported by backlogged unemployment insurance benefits subject to withholding tax, Dadayan said.
Between March and August, tax revenues fell 6.4 percent year over year, with 36 states reporting declines over that period, the report said. Between March and August, eight states, including Washington and Georgia, reported growth in tax revenue.
“Due to the shifting in timing of tax receipts this past year, it is crucial to view August year-over-year revenue gains and fiscal year to date data with caution,” Dadayan said in the report.