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Sales Tax Revenue Feels Government Shutdown

  • Oct 8, 2013 | Gail Cole

 Yosemite National Park. Closed.

Since the government shutdown began on October 1, 2013, approximately 800,000 “non-essential” federal employees have been sent home from work. Without pay. Another 1.3 million “essential” civilian employees still working may not see paychecks until after the government reopens.

Furloughed workers could use this time to see the country and visit a national park or two--but the national parks are closed. They could be armchair tourists and visit national park websites, but they’ll find themselves reading about the shutdown, not natural wonders.

And since they’re not getting a paycheck, furloughed employees are more likely to stay close to home and purchase essentials, like food, rather than non-essentials, like hotel rooms near closed parks.

But this raises an interesting question: how is the shutdown impacting sales tax revenue near National Parks and elsewhere?

National Parks

Visitors were ousted from National Parks last week. They may have remained in the area, staying in hotels and eating in restaurants and buying books about the parks they could no longer visit. They may have gone elsewhere, or they may have just gone home. The full impact of this shutdown on tourism is still unknown.

However, when the federal government shut down in the mid 1990s, hundreds of National Parks turned away roughly 7 million visitors. National museums and monuments turned away approximately 2 million visitors. Millions of visitors did not, therefore, spend money on hotel rooms and meals and trinkets, and the tourism and airline industries “sustained millions of dollars in losses.”  (Congressional Research Service).

State of Maryland

Federal employees live all over the world but are heavily concentrated in and around the nation’s capital. According to the Washington Post, the state of Maryland could lose $5 million a day in income and sales tax revenue while the government is shuttered: $42 million in state income tax and $9 million in sales tax revenue over a two week period. It is anticipated that federal workers will “spend about $145 million less on ‘taxable goods’ in Maryland…,” according to a memo prepared by Maryland Governor Martin O’Malley’s (D) budget advisors.

A good time to find a sugar daddy

The news feel grim. On a somewhat lighter note, if many areas of the economy suffer due to the government shut down, some businesses stand to benefit. Sugar daddies, for instance, may suddenly find their services in high demand. One sugar daddy dating website has reportedly seen a 50% jump in daily sign-ups (NPR). Will areas with a high concentration of sugar daddies (Manhattan? Los Angeles?) see a spike in certain sales? Time will tell.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.