Joe Cavaretta/South Florida Sun-Sentinel via AP
Florida and Texas are by far the largest states that have no income taxes, and they saw their revenues decline by 10 percent between 2019 and 2020.
Big trouble, that’s what.
The print edition of today’s Washington Post led off with a story reporting that state and local governments have been compelled to lay off 5 percent of their employees since the pandemic began, even as the pandemic has asked those governments to provide emergency services on a scale to which they’re unaccustomed.
The reason, of course, is that the pandemic has greatly reduced major sources of tax revenue. Hawaii has suffered from the drop in tourism; the oil-producing states of Alaska and North Dakota have suffered the consequences of the drop in driving.
One subject that the article neglects to consider, however, is what kind of taxes the various states levy. And it’s precisely on this subject that the major differences in the individual states’ finances become clear.
The states with the most progressive income taxes, it turns out, have been able to ride out the pandemic with little if any fiscal disruption. California, perpetually derided by right-wingers for having the most progressive income tax, actually saw no reduction in revenues between 2019 and 2020, as the wealthy have been doing just fine financially during the plague and paying their regular share of taxes. Likewise New York, Massachusetts, and Pennsylvania, which saw revenues dip by just 3 percent. Florida and Texas, by contrast, are by far the largest states that have no income taxes, and they saw their revenues decline by 10 percent. As for reduction in public-sector jobs, good old “Live Free or Die” New Hampshire—another state with no income tax—saw its state workforce shrink by a mind-boggling 26 percent, a full nine percentage points more than the second-ranked state.
While Republican governors and mayors are demanding that Congress retain the funds for states and cities that President Biden has allotted in his proposed $1.9 trillion rescue legislation, Republican members of Congress repeatedly have said they oppose such aid, terming it a “blue-state bailout.” But it’s not the blue states that have seen their revenues tank; it’s the red states that don’t wish to disturb their wealthiest residents by asking them to support public services. There’s no blue-state bailout. If anything, there’s Democrats’ concern for the red-state residents who have suffered from the cutbacks imposed by their Republican statehouses in thrall to the demands—and campaign contributions—from the rich.
