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.
When it comes to branch cleanliness and mask-wearing, the San Francisco bank is more diligent than its rivals in helping to reduce the spread of coronavirus, according to a new study.
Charles E. Davis, PhD, CPA, CMA, CGMA, is a Professor of Accounting at Baylor University. He has published numerous academic and practitioner articles, as well as a managerial accounting textbook now in its 4thedition. He currently serves on the Strategic Finance Editorial Review Board and is a past member of the AICPA’s Accounting Education Executive Committee and Precertification Education Executive Committee. Timothy Lindquist, PhD, is the PricewaterhouseCoopers Professor of Accounting at the University of Northern Iowa. Having previously served on the editorial board of Issues in Accounting Education, he has published numerous research articles in a mix of high-level academic journals and high-impact practitioner journals. His experience in higher education spans nearly 40 years. Joseph Ugrin PhD, CPA, is the Deloitte Professor of Accounting and head of the Department of Accounting at the University of Northern Iowa. He has published nearly two dozen research articles and serves as the associate editor for Advances in Accounting and on the editorial boards for the Journal of Information Systems and the Accounting Educators Journal. He is a CPA and the past chair of the AICPA’s Precertification Education Executive Committee.
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.