Revenue Stability

State Sales Tax Breadth and Reliance, Fiscal Year 2020

By failing to keep pace with modern consumption patterns, sales taxes have become less neutral, less equitable, and less economically efficient over time.

For Meaningful Federal Aid to States, Why Not Reimburse Unemployment Compensation Payments?

Improving trust fund solvency and staving off costly business tax increases is a win-win proposition for federal and state governments alike.

To What Extent Does Your State Rely on Sales Taxes?

Consumption taxes (like sales taxes) are more economically neutral than taxes on capital and income because they target only current consumption. Consumption taxes are generally more stable than income taxes in economic downturns as well.

Massachusetts Flavored Tobacco Ban Has Severe Impact on Tax Revenue

The Massachusetts flavored tobacco ban highlights the complications of contradictory tax and regulatory policy, the instability of excise taxes that go beyond pricing in the cost of externalities, and the public risks of driving consumers into the black market through excessive taxation or regulation.

Three New Year’s Resolutions for Tax Policymakers

The world is ready to close the book on 2020 and start fresh in 2021, awaiting widespread vaccination, an end to the pandemic, and the beginning of a new chapter of economic recovery. With a fresh start in mind, and a healthy dose of optimism, here are three New Year’s resolutions for crafting better tax policy in the coming year.

Where State Unemployment Compensation Trust Funds Stand in December

With 2020 nearing its close, state unemployment compensation trust funds continue to struggle under the weight of so many pandemic-created beneficiaries, though some funds are beginning to stabilize as people increasingly return to work.

State Tax Collections Down 4.4 Percent Through September, While Local Tax Collections Rise

Combined state and local tax collections were down only $7.6 billion across the period, representing a total state and local tax revenue decline of 0.7 percent compared to the first nine months of 2019.

Taxes and New York’s Fiscal Crisis: Evaluating Revenue Proposals to Close the State’s Budget Gap

Our new study provides a 360-degree assessment of New York’s budget crisis, analyzes proposed revenue options, and offers solutions to raise revenue without driving more taxpayers out of the state or undoing recent positive reforms

New Census Data Shows States Beat Revenue Expectations in FY 2020

State tax revenue collections were down 5.5 percent in FY 2020, driven by a dismal final quarter (April through June) as states began to feel the impact of the COVID-19 pandemic. While these early losses are certainly not desirable, they are manageable and far better than many feared.

Massachusetts Ban of Flavored Cigarettes Is Getting Expensive

Aside from public health concerns, a ban on flavored tobacco, especially when including cigarettes, has significant tax implications and could result in unintended consequences such as increased smuggling. In Massachusetts, more than 20 percent of cigarettes smoked are purchased out of state.

State Income and Sales Tax Revenues Slide in Second Quarter

Today marked the release of second-quarter GDP data and provides a new glimpse into early changes in state and local revenues and spending. All told, second-quarter state and local tax receipts came in about 3.8 percent lower than they did in the same quarter a year ago. Income and sales taxes fell considerably while property and excise tax collections remained stable.

Base Broadening

Tax Options to Promote Short-Term Recovery and Long-Term Economic Growth in Wisconsin

From a revenue standpoint, Wisconsin was better off than many states going into this crisis, but the policy decisions—including tax policy decisions—state policymakers make in the months ahead will have far-reaching implications for how quickly jobs and wages are restored in Wisconsin.

State Forecasts Indicate $121 Billion 2-Year Tax Revenue Losses Compared to FY 2019

Revised state revenue forecasts show a significant decline in projected revenues for both the recently concluded FY 2020 and current FY 2021, though the picture they paint is considerably less dire than many feared a few months ago.

Taxes: The Price We Pay for Government

Have you ever wondered where the money comes from to build roads, maintain a national defense, or pay for programs like Social Security? Taxes.

Can States Close Budget Deficits with Excise Tax Hikes?

We examine whether excise taxes are a solution to budget deficits, and while the short answer to that question is no, there are of course nuances. Excise taxes can play a role in state revenues even as policymakers appreciate that excise taxes are not viable long-term revenue tools for general spending priorities.

State Strategies for Closing FY 2020 with a Balanced Budget

State options for closing FY 2020 shortfalls are limited and may ultimately include drawing on reserve funds and even accounting tricks

How Healthy is Your State’s Rainy Day Fund?

Rainy day funds have increasingly emerged as a standard component of states’ budgeting toolkits. Economic cycles can have significant impacts on state revenue, but states can prepare for the inevitable downturns during good times by putting away money in a revenue stabilization fund.

Income Taxes Are More Volatile Than Sales Taxes During an Economic Contraction

In the short term, states must anticipate reduced tax collections as the economy slows. And here, not all taxes are created equal. As a general rule, income taxes are more volatile than consumption taxes.