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.
Eric Woodward is the senior advisor to Socure.
Socure provides digital identity verification and identity fraud prevention. Founded in 2012, the company's mission is to verify 100% of good identities in real time for customers including financial institutions, government agencies and enterprises across all industries.
Prior to Socure, Woodward was engaged in more than a dozen advisory roles — from advising public and private CEOs to senior executives to private equity firms — for digital identity, payments risk and data infrastructure opportunities. Before these advisory positions, Woodward was the group president of Early Warning, a financial institution data consortium, and the parent company of Zelle. During his time at Early Warning, he led the risk services business and initiated the build-out of Zelle's real-time fraud and risk capabilities. Prior to that role, he led the strategy and M&A group at Early Warning.
Peter Pezaris is New Relic's Chief Design and Strategy Officer, leading user experience vision and design and design system and quality. Prior to New Relic, Pezaris was the Founder & CEO of CodeStream, a service that helps development teams discuss, review, and understand code. Before CodeStream, Pezaris was Founder & CEO of Glip, a team collaboration platform acquired by RingCentral in 2015, and Multiply.com, a social commerce platform acquired by Naspers in 2010. He also founded Commissioner.com, one of the first online fantasy sports platforms, which was acquired by CBS in 1999. A seasoned entrepreneur and tech executive, Pezaris is a recognized expert in the collaboration and social networking space, pioneering several of today's most commonly used features in real-time messaging. Pezaris holds BS degrees in Computer Science and Applied Mathematics from Carnegie Mellon University.
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.