State revenue growth increased 2.1% in October compared to year-earlier levels, but employment declined 6.1%.
The numbers, from the Urban Institute’s Monthly State Tax Revenue Highlights, reflect the disparate effect the COVID-19 pandemic is having on state economies, with some seeing growth in corporate and personal income taxes yet declines in jobs.
Overall, revenues rose 2.1% with personal income taxes up 1.6%, sales tax revenue increasing 3.8% and corporate taxes up 12.2%. A large chunk of the growth in personal and corporate taxes came from California, which was the result of changes in tax rates. Excluding California, corporate taxes were up 4% overall. Twenty states saw declines in corporate income tax revenue.
Sales taxes increased in 35 states but declined in eight. “In some states there is a disconnect between consumer spending (substantially down) and sales taxes (modest growth),” the institute reported. The drop in personal consumption came from lower spending on services, which some states exempt from sales taxes.
While the gain in October was positive, the report noted the data cover a month before the recent surge in new coronavirus cases and deaths. “Even as some states have seen rebounding sales tax revenues in the recent months, that is likely to change in the coming months,” the institute noted.
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States See Modest Revenue Growth in October, but Suffer Bigger Employment Losses originally appeared on usnews.com