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.
Tom is a Principal in the Health practice and leads the voluntary benefits team at Buck, an integrated HR, pensions, and employee benefits consulting firm. For more than 20 years he has helped some of the country's largest and most respected employers design voluntary benefit programs that deliver on business objectives and drive greater employee engagement.
Usama Fayyad is Executive Director of the Institute for Experiential AI/ Northeastern University, Boston, MA.
Previously he was the Chairman & Founder: Open Insights, LLC, San Francisco, CA, USA (established in Seattle, WA, 11/2008). Chief Data Officer: Group MD, Barclays, London(2013-2016). Chairman Oasis500: appointed Exec Chairman by King Abdullah II of Jordan (2010-2016). Chairman & CTO: Blue Kangaroo (2010-2013), Burlingame, CA. 2004-08: Yahoo! Chief Data Officer/EVP – 1st CDO in industry. Co-Founder/CEO: Open Insights ('08), DMX Group (acquired by Yahoo! '04), Audience Science/digiMine ('00). 1996-00: led Microsoft Research Group & data mining SQLServer products. 1989-96: NASA's JPL earning Caltech's top research excellence award & U.S. Government medal-NASA. 1991: Ph.D. U of Michigan, Ann Arbor (2 BSE's: EE & CSE; MSE: CSE & M.Sc. Math)
Ruth is a Principal in Engagement practice at Buck, an integrated HR, pensions, and employee benefits consulting firm. She has conducted extensive employee surveys and focus group research to assess employee needs, define business strategy, and guide program design.
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.