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.
David G. Barbeito, CPA, is a managing partner at De La Hoz, Perez & Barbeito PLLC. At his firm, they work with entrepreneurs locally and internationally across various industries and assist them with audit, tax, and accounting services. Reach him dbarbeito@dpbcpa.com.
Damon Fleury has held product and technology leadership positions for a variety of companies in the networking and security sectors over the last 25+ years. His specialty has been joining companies early in their development to help build and release initial products and then optimizing strategies to enable their success in the marketplace.
Damon has led teams at TippingPoint (Trend Micro), Mirage Networks (Trustwave), Exodus Intelligence, NSS Labs, and CacheIQ (NetApp), and held leadership positions in Engineering, Product Management, and Market Strategy to develop and launch innovative and disruptive products.
Prior to joining SpyCloud as the VP of Strategy in early 2022, Damon served as the Chief Technical Officer and VP of Cybersecurity Services at Texas-based MSSP CyberDefenses. In this role, Damon supported the growth of the commercial and SLED services business, including the creation of and go-to-market efforts for SOC, Security Engineering, Cyber Intelligence, CISO Advisory, and Incident Response services.
As Chief Product Officer of SpyCloud, Damon is responsible for the product roadmap and strategic innovation initiatives that have driven SpyCloud to become the leader in Cybercrime Analytics – helping enterprises combat cyber threats including ATO, ransomware, and online fraud.
Donna Milrod is the chief product officer of State Street Corporation.
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.