State and Local Governments Ponder Massive Tax Hikes in Response to COVID Budget Hit

Shutdowns of business amid the coronavirus pandemic have left many American families financially destitute, and now elected officials across the country are considering tax hikes in order to fill budget shortfalls as government, too, is feeling the strain.

Since March, when state and local officials nationwide enacted strict measures to restrict contact between people and thus throttled commerce, millions of Americans have lost their jobs.

The shutdowns were sure to have far-reaching effects, as those who were not earning and spending money could not pay the taxes that funded state and municipal programs.

According to numerous reports, many of these civic leaders intend to shore up their budgets by raising taxes on people who might be finally returning to work, and are doing little to cut government excess in order to avoid passing the buck.

The Dallas City Council, for example, voted six weeks ago to raise property taxes by 3.5 percent.

KXAS-TV reported the citizens of Dallas might be getting off easy, as the council did not exercise an option to increase property taxes up by as much as 8 percent.

The outlet reported the decision to raise property taxes came as the city found itself with a $25 million budget hole, which will be plugged by taxing those who have already sacrificed so much in the name of public health.

Budgetary deficits, though, are not limited to Dallas.

In Chicago, for example, Mayor Lori Lightfoot is seeking a way to make up for a $700 million budget shortfall.

WMAQ-TV reported that leaders in Chicago, like those in Dallas, intend to make some of that lost tax revenue back by raising property taxes.

With the city’s hospitality sector essentially shuttered and big events canceled and thus not available to bring revenue to Chicago, the city government will seek to make up the budget shortfall through increased taxes.

“While this budget shortfall is grim, what would have been worse is if we had seen more people die … if we hadn’t sheltered in place,” Lightfoot said, per WMAQ.

In other areas of the country where the consumption of goods and services had at one point ground to a near halt, leaders intend to make up the loss in tax revenue by targeting the pockets of citizens who had no say in how leaders were, in some cases, arguably overzealous in their mandates to close businesses amid the pandemic.

In Seattle, which has seen its business community devastated by closures in the name of public health, even amid mass public protests, the City Council recently approved a measure to take in $7 million in annual payroll taxes.

Blaming the coronavirus, the “JumpStart Seattle” tax will require businesses to pay up to 2.4 percent on local employees who earn more than $150,000.

Meanwhile, in New Jersey, Gov. Phil Murphy and Democrats in the state legislature are seeking to borrow $10 billion to help make up for a $20 billion budget deficit.

State Republicans intend to fight the loan, but Murphy says it is the only way the Garden State can avoid raising property taxes, according to NJ.com.

“I think everybody recognizes the need for the borrowing, as painful as it is,” Murphy, a Democrat, said. “We know we don’t have a choice, even with federal cash, even with revenues.”

Murphy also did not rule out raising taxes on his citizens.

The Washington Post reported that Murphy said “everything is on the table” with regard to shoring up the state’s budget.

In neighboring New York, Senate Bill S8277 has been proposed to make the state’s billionaires make up for the state’s budget deficit.

The bill would target anyone worth more than $1 billion and would view capital gains as income while also taxing unrealized capital gains.

SB S8277 would essentially redistribute that wealth to citizens who do not qualify for unemployment or other relief programs.

The New York bill, described as the “billionaire mark to market tax act,” would establish “a billionaire mark to market tax taxing residents with $1 billion dollars or more in net assets and directs revenue from such tax into a worker bailout fund; establishes a worker bailout program providing workers traditionally excluded from wage protection programs access to unemployment benefits.”

While many state and local governments are turning to citizens for a bailout, one Southwest Texas city has taken that idea off the table.

El Paso, like other cities, is feeling the strain of economic downturn because of business closures amid the pandemic, but City Manager Tommy Gonzalez said the city will not pass the buck on to embattled families and businesses, KFOX-TV reported.

“No increase in the tax rate,” Gonzalez told the outlet. “We really feel like we need to go slower and give our citizens a break and give our businesses a break. We think if they recover it will help the citizens recover as well.”

He said the city would find a solution that seeks to work for everyone.

“We are tightening our belts also,” Gonzalez said.