Some States, Cities Raising Taxes Amid Pandemic; More Tax Hikes Coming

Is 2020 not bad enough yet? A pandemic sweeping the nation for months, tens of millions out of work, even giant murder hornets swooping in?

Now comes word that some states and cities are considering raising taxes — and some are already doing it.

Nashville council members last month adopted a 34% property tax hike as part of a spending plan that increases taxpayer funding for the police department and public schools, and includes money for teacher raises, the Tennessean reported.

With small businesses, including restaurants and bars, shut down amid the pandemic panic, budget experts are predicting hard times for state and local governments.

“We now project that the state budget shortfalls expected from COVID-19’s economic fallout will total a cumulative $555 billion over state fiscal years 2020-2022,” according to the left-leaning Center on Budget and Policy Priorities, based in Washington, D.C. “This figure is for state shortfalls only and does not include the additional shortfalls that local and tribal governments and the U.S. territories face.”

“The projected shortfall for 2021 fiscal year, which began on July 1 for most states, is much deeper than the shortfalls faced in any year of the Great Recession,” the center said. “These figures underscore the continued urgency of the President and Congress enacting substantially more fiscal relief and maintaining it for as long as economic conditions warrant.”

California Gov. Gavin Newsom late last month hiked taxes by $4.4 billion when he signed a $202 billion budget, which did away with tax breaks for medium and large businesses. Still, the nation’s most populous state projects a $54 billion budget deficit. New York, the fourth most populous, is also eyeing higher taxes.

Meanwhile, the city council in the liberal city of Seattle “passed a tax on businesses that spend at least $7 million in annual payroll, citing the pandemic. The tax could apply to about 800 businesses and raise more than $200 million a year toward an estimated $378 million budget gap,” Pew reported. “And the District of Columbia Council this month voted to raise the gas tax and eliminated some tax breaks for businesses to raise $63 million toward an anticipated $800 million budget hole.”

Other big cities are following suit. Philadelphia has increased fees on parking and raised income taxes on workers who live outside the city, while Chicago Mayor Lori Lightfoot (D) said last month that a property tax increase to cover her city’s $700 million budget shortfall cannot be ruled out.

Americans are tapped out, a new poll finds. “Overall, roughly a quarter of Americans say they have lost savings and about as many have lost income, according to the latest COVID Response Tracking Study, conducted by NORC at the University of Chicago. About 2 in 10 report losing a job and roughly another 2 in 10 say they have put themselves at risk of exposure to the virus for work,” The Associated Press reported.

And Congress has done little to alleviate the pain, passing only a single $1,200 payment to many Americans but doing nothing for the past few months. But Tax Day arrived nonetheless on July 15, a few months late. Lawmakers are just beginning negotiations on getting more money to Americans, but don’t hold your breath.