COVID-19 cuts at least 10 states’ tax revenue by 30%

At least 10 U.S. states will see their tax collections shrink by more than 30% due to the COVID-19 pandemic, say researchers at Arizona State and Old Dominion universities.

On average, states’ tax revenue will fall ~20%, economists say.

New York’s tax collections are projected to fall 40% and Maine’s is expected to decline 39.7%; Hawaii, Maine, and California round out the top five in terms of COVID-19 impact.

Meanwhile, Congress is deadlocked over whether it should send more cash to states.

The researchers figure that a one percentage-point increase in employment translates to a 1.56% pp rise in tax revenue; they reverse-engineered the number using state unemployment-insurance claims as of June 5 to calculate the average 20% tax revenue impact of the pandemic.

The states or districts expected to experience revenue declines of 4% or less are Alaska; Washington, DC; and South Dakota.

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