Just prior to the global Coronavirus outbreak, serious signs of an emerging financial crisis began to emerge. As people were beginning to realize that yet another central bank engineered ‘bust’ was coming down on us, we were thrown into lockdown, shuttering millions of businesses and sending millions of people to the unemployment line.
Now, a few months later, we are starting to realize just how deep the economic fallout will be, and Americans are scrambling to adjust their lifestyles to a totally new world order. At the top of the food chain, though, is government. City, county, state and federal.
In the midst of such a bizarre and frightful socioeconomic crisis, the tax man is hurting too. Tax revenues at all levels of government have plummeted like never before, and the pain is especially acute for city budgets who’ve seen sales tax revenue nosedive. While the American citizenry is seeing a drastic drop in income, so is Uncle Sam and all of his bureaucratic agencies.
Take a look at some of the numbers.
“CBPP estimates that state budget shortfalls will ultimately reach almost 10 percent in the current fiscal year (which ends on June 30 in most states) and about 25 percent in fiscal year 2021 based on recent economic projections.
Kansas estimates an $827 million drop in revenues.
Arizona expects revenues to drop by $1.4 billon.
Arkansas expects $353 million less in revenue, with $193 million due to the income tax filing extension to July 15 and the remainder due to lower collections.
California expects revenues to decline by $32 billion in 2021 alone, according to the Department of Finance. The revenue declines in fiscal years 2020 and 2021, combined with COVID-19 costs and increased need for other state services, will result in a deficit equal to 37 percent of the general fund budget — more than three and half times the balance in the state’s substantial rainy day fund.
New York’s tax revenues will fall by $12 billion in 2021 and by $16 billion in 2022, according to the state’s Division of Budget.
For states like Texas, Alaska and New Mexico which depend on oil revenue to balance their budgets, the financial hit will be a double whammy.
While Americans clamor to figure out how to make ends meet in their own households, so too is government trying to figure out how to balance budgets, and the reality is that once these emergency accounting measures really begin to sink in, Americans aren’t going to like it one bit.
The question for mayors and governors will be, ‘how much money can we extract from the people without causing extreme poverty and triggering widespread revolt?’
The answer, of course, is taxes. Primarily property taxes, because that’s the one thing people are still paying while locked down at home and unable to shop.
- Nashville Mayor John Cooper is openly proposing raising property taxes by 32% in order to correct an estimated $250 million budget shortfall.
“”There is no choice but to have a significant increase in property taxes,” he said. “Measured in a percent, it’s going to be on the order of more than 20 percent to be sure.” [Source]
- Dallas, TX is looking at a proposed 8% increase in property taxes, and is having to work a loophole that allows them to ignore state law which would prevent them from raising taxes more than 3.5%. [Source]
- Expecting a $700 million shortfall, Chicago’s Mayor Lightfoot has said that a property tax increase is ‘on the table.’ [Source]
- California is considering a partial reversal of Proposition 13, which would allow government to assess commercial properties differently, creating an increase in property tax revenue without actually increasing the property tax rate. [Source]
- Other initiatives include “Arizona, where taxes would be raised on incomes above $250,000 to boost teacher salaries; Colorado, which is targeting corporations for at least $151 million in taxes to fund out-of-school learning; and North Carolina, which would issue bonds worth $1.9 billion in part to pay for school capital improvements.” [Source]
- New York is pitching the idea of tax increases for wealthier people. [Source]
- New Jersey is expected to see an unknown increase in taxes as the governor moves to borrow billions of dollars to cover budget gaps. [Source]
- CNBC reports that many states across the nation will be looking at tax increases in many areas, including corporate income taxes, online purchases, excise and sales taxes, property taxes, and gross receipts taxes. [Source]
As we move forward in this deepening crisis, we shall see how all of this works out, but for to be sure, Mr. and Mrs. America, even though you didn’t create the fraud in the financial system, and even though you were forced to close down your business, you will now be used as tax cattle to pay for this giant fustercluck.