This at a time when education funding should be expanding. The Trump administration’s failure to control the pandemic has made it impossible in most places to safely open schools at current funding levels, but large budget increases to support smaller class sizes, building retrofits and other innovations could make it possible for kids to attend classes in person rather than on the computer. Instead, many districts are shuttering buildings and laying off teachers and other staff members.
This will have consequences for kids, families and our economy for years to come, and it is also stymying whatever recovery is possible: One in five out-of-work adults has stopped working because of the need to supervise online learning or care for younger children.
Some worry that state residents and businesses can’t afford a tax increase during the pandemic, but the truth is that many can, and it’s easy to target them through progressive taxation. Tens of millions of workers have lost their jobs since the beginning of the Covid-19 crisis, but almost half of Americans report that their household has not lost any employment income at all, according to Census Bureau data. That figure jumps to two-thirds for households bringing home more than $200,000 per year.
The current situation is stacked on top of enormous existing inequality, with state and local tax policies that frequently ask the most of those least able to pay. The bottom 20 percent of earners pay, on average, a state and local effective tax rate more than 50 percent higher than that paid by the top one percent.
At the same time, state budget cuts fall disproportionately on those who are hardest hit by the pandemic. Black and Latino Americans have been infected with the coronavirus at three times the rate of whites, and died from the disease twice as often. They have also lost jobs and seen their incomes drop at a higher rate than white Americans, and they are disproportionately affected by public-sector layoffs.
Some will argue that states can’t raise taxes by themselves because of interstate competition, but economic evidence shows that even in boom times progressive state tax increases don’t harm state economies or lead rich people to flee. Now, with education and public health on the chopping block without higher taxes, moving to a low-tax, low-services state is likely to be still less appealing, even for the wealthy: States that institute ruthless cutbacks will prove to be far less attractive places to live.
Economic recovery will require more funding for state and local services. Some steps should be obvious: The 15 states that have not implemented Medicaid expansion, for example, could provide health insurance to millions of Americans, drawing billions of federal dollars into their local economies and over time reducing their overall spending out of local resources. All it would take is a willingness to cover 10 percent of the costs of expansion now.