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.
Erich S. Huang, M.D., Ph.D., is the head of clinical informatics at Verily Life Sciences.
Ken Moss is chief technology officer of Bill. He brings more than 30 years of experience in global technology teams at a variety of companies and industries including online commerce, search and interactive entertainment. Before joining Bill, he was chief technology officer for eight years at Electronic Arts, where he led the company through a cloud-based transition and pioneered broad uses of data and AI to improve the game creator and player experience. Prior to that, he was vice president of marketplaces technology, science and data at eBay. He was also general manager, director of development, and founder of internet search at Microsoft, where he oversaw the development and engineering with key product teams working on Bing and MSN Search.
Flora Coleman heads up the global policy and government relations team at Klarna. Before that, she developed the global government relations and social impact team at international money fintech Wise. This follows a decade of senior political advisory work, including three years as a senior legislative advisor to the U.K. Government.
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.