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.
Espnola (Nola) Cartmill is Holmes Murphy's Chief Diversity Officer. As part of this role (as well as being part of Holmes Murphy's Legal Counsel), Nola leads Holmes Murphy's DE&I strategy, making strategic recommendations to the Executive Committee on DE&I initiatives, including recruiting, education, mentoring, and communications and community involvement. Nola also leads Holmes Murphy's internal DE&I committees, subcommittees, and employee resource groups.
Additionally, Nola consults on internal employee relations, leadership training, human resources, growth and development, and compliance-related projects.
Cartmill's background includes a prominent law career, rooted in a passion for DE&I, where she previously assisted employers in tackling both day-to-day employment law issues and litigation.
Louis Caditz-Peck is a member of the Consumer Financial Protection Bureau consumer advisory board and policy director at LendingClub.
Marc Montpas is director of the accountant channel at Rippling.
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.