Which Taxes Pay for Which State and Local Employees?   [open pdf - 0B]

From the Document: "The economic crisis triggered by the COVID-19 [coronavirus disease 2019] epidemic has led to historic job losses across a range of industries. Nonfarm payroll employment as reported by the Bureau of Labor Statistics (BLS) declined by 20.5 million in April, the largest drop since the start of the series in 1939. Employment fell in all major industries, but losses were particularly dramatic in leisure and hospitality (7.7 million, or 47 percent). These numbers indicate the size of the shock and the reduction in output that will follow from it. As production and consumption fall, so do some types of tax revenue. This is particularly problematic for state and local governments, as they generally face balanced-budget requirements the federal government does not. In addition, many local governments are constrained in what types of taxation they may use owing to limitations imposed on them by state governments. Revenue shortfalls at the state and local level can therefore have significant consequences for the almost 20 million workers who are employed by state and local governments."

Mercatus Center
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