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.
Abhishek Peter is the Manager - Digital Marketing at FECUND Software Services. He has a passion for solving complex problems with innovative solutions. Through his blog, Abhishek shares his expertise and provides insights into the worlds of marketing, insurance, technology, and more.
Nick is a startup veteran and Internet technology expert with over 25 years of application development, testing, and cybersecurity experience. He is recognized as an industry expert in the realms of API development, API management, and API security. In the world of APIs, Nick has helped architect and implement some of the largest API Management and monolith to microservice digital transformation projects in North America. Nick has had the honor of speaking at prestigious conferences including Blackhat, RSA, AWS re:inforce, SecureWorld, APIWorld, and his expert opinions are regularly featured in prominent publications such as Darkreading, Infosecurity Magazine, Computer Weekly, SC Magazine, Security Boulevard, Security Week, and many others.
As Field CTO and Product Strategist at Salt Security, Nick helps guide and positively influence how organizations can foster API-driven success, while protecting themselves from today's emerging API security threats. Prior to joining Salt, Nick was an early contributor to the success of Kong, the world's most widely used API management platform.
Monica McCoy is the founder and CEO of Monica Motivates.
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.