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.
Kayly Hill is the Director of Strategic Accounts at Nava Benefits, a modern benefits brokerage on a mission to bring high-quality, affordable healthcare to all Americans. With more than two decades of experience spanning insurance and benefits consulting, Kayly is committed to helping clients improve their employees' benefits experience while managing costs.
Stacey Lowman is the head of employee well-being at Claro Wellbeing, a financial wellbeing provider that offers one-to-one coaching sessions, in-person and remote employee webinars and workshops and access to financial courses and content to support employees financial goals.
Claro is offered as an employee benefits package that provides accessible financial guidance and educational resources to help employees feel more confident and supported in their roles, boosting engagement and performance, whilst also enhancing a company's workplace benefits to help retain staff and attract first-rate talent.
Eric Ly is the Founder and CEO of KarmaCheck, a first-of-its-kind company that uses data-driven technology to bring truth, speed, and efficiency to background checks. Ly is the cofounder of LinkedIn, a social networking platform, where he served as the chief technology officer. Ly helped launch LinkedIn from a strategic perspective and assisted with the architecture and implementation of specific aspects of the networking and search algorithms. Ly even acted as the vice president of desktop, building a team of professionals to lead the desktop integrations. Ly attended Stanford University, where he earned his bachelor of science in symbolic systems, and the Massachusetts Institute of Technology (MIT), where he earned his master of science in media arts and sciences. After earning his MS, Ly returned to Stanford to pursue a Ph.D. in computer science. After co-founding LinkedIn, Ly founded Presdo, Hub, KarmaCheck, and several other companies.
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.