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This fact brief was originally published as an experiment to test the concepts behind fact briefs.

Readers should be aware that while there is still a lot of useful information in fact briefs like this one, not all of them reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date, don't hesitate to contact us at support@gigafact.org.

FACT BRIEF

Has the pandemic’s impact on state tax receipts been less severe than anticipated?

Wednesday, January 20, 2021

By Lisa Freedland

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YES

The pandemic‘s effect on state tax revenues has been less severe than first expected. In 2020’s second quarter, receipts dropped as states extended tax deadlines in line with the federal government. The Tax Foundation in September concluded the impact was “far lower” than first feared. Specific federal relief measures have helped offset gaps. An additional $100 billion enacted in December will extend support in 2021.

Brookings forecasts a total state and local decline of 5.7% in 2021, following a 5.5% fall in 2020.

In California, which imposes high income-tax rates, receipts between August and October were 22% higher than expected. The state foresees one-time “windfall” gains in its next fiscal year of up to $40 billion. Any effect from widely-reported relocations by certain companies and prominent residents to lower-tax states would not be felt immediately.

This fact brief is responsive to conversations such as this one.

Sources

Tax Foundation: New census shows states beat revenue expectations in fiscal 2020

Tax Foundation: The COVID-19 relief bill contains over $100 billion in state aid after all

Brookings: How much is COVID-19 hurting state and local revenues?

State of California: Legislative Analyst’s Office—Fiscal outlook

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Gigafact

Between 2020 and 2022, under close editorial supervision, Gigafact contracted a group of freelance writers and editors to test the concepts for fact briefs and provide inputs to our software development process. We call this effort Gigafact Foundry. Over the course of these two years, Gigafact Foundry writers published over 1500 fact briefs in response to claims they found online. Their important work forms the basis of Gigafact formats and editorial guidelines, and is available to the public on Gigafact.org. Readers should be aware that while there is still a lot of relevant information to be found, not all fact briefs produced by Gigafact Foundry reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date and need to be looked at with fresh eyes, don't hesitate to contact us at support@gigafact.org.

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Fact briefs are short, credibly sourced summaries that offer “yes/no” answers in response to claims found online. They rely on publicly available, often primary source data and documents. Fact briefs are created by contributors to Gigafact —a nonprofit project looking to expand participation in fact-checking and protect the democratic process. See all fact briefs here.