Research Report State Tax and Economic Review, 2021 Quarter 2
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States Experienced Strong Revenue Growth in the Second Quarter of 2021
Lucy Dadayan
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State tax revenues saw large swings since the onset of the pandemic, in part because of government actions and behavioral responses to mitigate virus exposure.

States reported strong revenue growth in the second quarter of 2021, but that is largely because of the lower base in 2020. Still, growth in state government revenues in the second quarter of 2021 was also strong compared with the same quarter in 2019.  

Despite a more positive fiscal and economic reality than initially feared, some underlying economic indicators are still troublesome: unemployment rates are still higher than prepandemic levels; labor force participation remains subdued, potentially because of health and child care concerns; and overall prices have grown substantially, resulting in a higher-than-usual inflation rate.

Research Areas Economic mobility and inequality Taxes and budgets State and local finance
Tags Fiscal policy Tracking the economy State and local tax issues Individual taxes Taxes and business
Policy Centers Urban-Brookings Tax Policy Center
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Overall state tax revenues were stronger during the pandemic than initially feared, in part due to the generous federal stimulus packages that have injected trillions of dollars into the economy. However, states still need to be conservative in their budget and forecasting because of the high lev...