State revenues look positive despite unexpected drop in corporate tax collections
The report for August 2020 state General Fund tax revenues was released today, September 15, and the state looks to be recovering from the recession we entered just a few months ago.
According to the Nebraska Department of Revenue, the actual tax revenues are 6.4% higher for the fiscal year than projected by the state’s revenue forecasting board. Tax refunds are also forecasted, and those were below projections for the month of August, adding to the net surplus of tax revenues.
August net tax revenues:
- Net sales and use: 29.9% above forecast
- Net individual income: 10.6% above forecast
- Net corporate income: 79.8% below forecast
- Net miscellaneous: 7.1% above forecast
Total August revenues were $513 million, which equates to 15.2% above the forecasted amount of $446 million.
However, it is important to note that the net corporate income tax revenues are nearly 80% below forecast – indicating that the state has not completely recovered from the COVID-19 pandemic’s economic implications. The projected amount of corporate tax revenues was $8,173,000 whereas the actual collections were only $1,651,080.
Part of this could be because the Paycheck Protection Program (PPP) money went primarily to small businesses that are considered ‘pass-through’ entities and file using the individual income tax. It could also be because many people are continuing to purchase a lot of items online and not through traditional brick and mortar businesses.
Whatever the reason, it is something to keep an eye on during future revenue reports. Being nearly 80% off forecast is not within the margin of error.
Nebraska’s Revenue Forecasting Board will have their next meeting on October 29th in Lincoln.