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The impact of an aging population on state tax revenues
People tend to earn less and spend less when they retire. As the baby boom generation retires, the aging of the U.S. population will likely reduce state governments? revenue per capita from income taxes and sales taxes significantly.
Understanding State and Local Government Spending over the Business Cycle
State and local (S&L) government spending is essential for providing public services and infrastructure and accounts for more than 10 percent of GDP. How this sector responds during a recession can play an important role in shaping the overall economic recovery.Huixin Bi, Chaitri Gulati, and Nora Traum document how S&L government expenditures have evolved over the business cycle since the 1950s. They find that from 1950 to the mid-1980s, S&L spending followed no uniform pattern after recessions: spending was sometimes procyclical (declining during recessions) and sometimes countercyclical ...
Forecasting the New England States’ Tax Revenues in the Time of the COVID-19 Pandemic
State governments across the United States face the prospect of sharply declining tax revenues due to the COVID-19 pandemic. They need reliable and up-to-date revenue forecasts to make financially sound policy decisions during this public health and economic crisis. This paper proposes an objective, transparent, simple, and efficient method to forecast state tax revenues in this time of the COVID-19 pandemic. The model is based on only two input factors: the state unemployment rate and an empirically determined time trend. The predictions from the model closely track the actual values of tax ...
COVID-19 and States' Revenues: An Analysis
Although the 2020 recession was likely the deepest in recorded history, state revenue losses have not been as severe as in past recessions.