State policy makers and budget officials are facing a period of greater economic uncertainty as forecasts increasingly point to the likelihood of at least a mild U.S. recession in 2023. Over the past year many states have sought to stay ahead of any downturn by managing their budgets more prudently.
Roughly 30 states took some type of permanent tax policy action in 2022 through their legislatures—rate cuts for income, corporate, or both, plus some sales tax holidays—to offer relief to taxpayers. Many also put more guardrails in place to help offset future economic volatility by funding reserves, instituting revenue triggers, or slowly phasing in rate cuts.
On this episode of Talking Tax, Bloomberg Tax reporter Donna Borak speaks with Eric Kim, head of state ratings and senior director at Fitch Ratings, about his outlook on the U.S. economy and how states are preparing for what's expected to be challenging economic times ahead.
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