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.
Scott Weinstein has more than 36 years of actuarial experience. Throughout his professional career, he has worked extensively with national and global insurance and reinsurance companies as well as with numerous self-insured programs. He specializes in identifying and quantifying exposure to risk and improving actuarial processes and reporting.
Ian Sterling has more than 18 years of actuarial experience. Throughout his professional career, Ian has worked with actuaries, claims, underwriting, and finance professionals at regional and global insurance and reinsurance companies, as well as self-insured corporations. Ian has assisted clients in both an audit and advisory capacity. This has included a focus on transformation and innovation, such as, advising on actuarial and finance modernization, machine learning claim / policy level modeling, advanced data exploration and reporting with data visualization. Ian has been a frequent speaker at conferences and written articles on topics, including robotics and automation within actuarial, the changing actuarial role, and loss reserving in the future.
Brett Jurgens is the CEO and Co-founder of Notion, a Comcast company (acquired in 2020), empowering home and property owners to be proactive in monitoring their spaces and most valued possessions. Through partner programs, Notion helps insurance carriers, agents and service providers provide value to their customers with Notion’s DIY smart monitoring technology.
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.