Nathan C. Goldman, Stephen J. Lusch, Luke Watson, Is State Tax Policy Associated with State-Level COVID-19 Restrictions?, 2026 Contemp. Acct. Rsch. 1, https://doi.org/10.1111/1911-3846.70039:
During the COVID-19 pandemic, states imposed restrictions intended to slow the spread of the virus. We investigate whether states’ reliance on consumption tax revenue, relative to other tax revenue sources, is associated with the duration of COVID-19 mobility restrictions. We find that states that are more dependent on consumption taxes experienced shorter durations of stay-at-home orders, restaurant closures, and bar closures. We conduct a series of analyses to mitigate concerns that state-level political preferences and biases may be influencing our findings. Our findings suggest that anticipated shortfalls in consumption tax revenue may have shaped public health responses, consistent with tax system structures relating, unintentionally, to crisis management decisions.
From the Conclusion:
Our findings intersect economics, tax policy, and public health by documenting evidence that longstanding state tax policy implicitly incentivizes certain public health policies, even if it is not the purpose of the tax policy or the conscious decision of the policymaker. Both consumption taxes and pandemic restrictions affected nearly everyone, so the relation between them is especially intriguing, and we believe our study is the first to draw this connection. We also emphasize that it was not necessarily the reality of sales tax revenue shortfalls that drove this relation, as most states did not face tax revenue shortfalls ex post. Yet state policymakers did not accurately foresee the tax revenue impacts of restrictions when they were enacted, and they likely perceived that restrictions would create sales tax revenue shortfalls. Our study suggests that economic misperceptions relate to public health policy. . . .
