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.
Christina Lee is a Researcher at ACTUAL, where she focuses on comprehensive policy and industry-related research. With a keen interest in energy and sustainability, Christina delves into topics ranging from renewables and green hydrogen to supply chain dynamics and electric vehicles (EVs). Her research involves synthesizing complex data and trends to provide actionable insights for decision-makers in both public and private sectors. Christina earned her BA in Urban Studies and Planning from the University of California, Berkeley, from the College of Environmental Design.
Karthik Balakrishnan, Ph.D, is the President and Co-founder of ACTUAL, the Capital Planning Software that allows enterprise CFOs to greenlight the investments which allow them to meet their sustainability goals. With over a decade of experience working at the intersection of asset transformation and supply chain, Karthik has established himself as a sought-after leader, speaking at various events on sustainable development, government policy and global implementation. Karthik holds a PhD and MS from Stanford and a BS from UC San Diego all in Aerospace Engineering.
The program honors outstanding achievements in developing technology and implementing solutions that improve the growth and scalability of wealth firms, and enhance client engagement and experiences.
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.