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.
Karen Abramson is CEO of Wolters Kluwer Tax & Accounting, a global provider of information, software, and integrated workflow solutions for tax, accounting, finance, audit, risk and compliance professionals. As CEO of the global division, she leads Wolters Kluwer tax and accounting operations worldwide, with activities across North America, Europe and Asia Pacific. Previously at Wolters Kluwer, she served as president and CEO of the Medical Research business unit and general manager of the Corsearch business unit. Before her tenure at Wolters Kluwer, Abramson held various leadership positions with MemberWorks, Inc. and Thomson Corporation.
Neil brings over 25+ years of business and technical experience in various product and business development roles in technology companies specializing in software solutions for Insurtech, Fintech, Telecoms, Real Estate, Geospatial and Telematics. Neil has held senior management positions in both start-up and corporate entities and is comfortable with merger & acquisition environments. Neil is currently the chief strategy officer for Arturo.ai, a property intelligence company.
Jonathan Rogers, co-managing partner, leads the strategic growth of the Wealth Advisor Alliance and the operations of its parent RIA, Forum Financial Management. He supports financial advisors across the Wealth Advisor Alliance and Forum communities.
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.