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.
Erik Asgeirsson is a technology industry veteran with expertise in cloud computing , e-commerce and business expansion. He has led CPA.com, the technology subsidiary of the American Institute of CPAs, since 2002. Asgeirsson is regularly listed in Accounting Today’s annual Top 100 Most Influential People in the CPA Profession, and is a member of the DigitalNow Advisory Group, which counsels association leaders on opportunities in the digital age. Before joining CPA.com, he held a variety of senior positions at AT&T in sales, product management and operations. In his last role, he was a sales director for AT&T Business Services — the company’s largest division — where he oversaw a market segment with revenues of more than $100 million. He holds an MBA from The New York University Stern School of Business and a B.S. in Electrical Engineering from George Washington University. Early in his career, he served as a Peace Corps volunteer in Tanzania. He lives in Rye, N.Y., with his wife and three daughters. In his spare time, Asgeirsson is an enthusiastic sailor and skier.
Bob Dohrer is the chief auditor of the American Institute of CPAs, where he leads professional standards teams in the delivery of high-quality, innovative audit, attest, quality control, review, compilation and preparation standards. He also provides strategic direction to the Auditing Standards Board and the Accounting and Review Services Committee.
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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.