Tax Revenues Held Up Even as Economies Crashed During Pandemic

Government tax revenues in rich countries rose as a share of economic output in 2020, as job losses were concentrated in low-wage employment and high-income jobs were hit less hard.

That surprise outcome underlines the novel nature of the economic contraction that accompanied the first surge of Covid-19 infections, and contrasts with the global financial crisis, when revenues fell as a share of economic output, an outcome more typical of recessions. Without that resilience in tax revenues, governments would have had to borrow even more than they did.