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"The Shrinking Tax Base: How Declining Fertility Rates are Impacting State Budgets"

"The Shrinking Tax Base: How Declining Fertility Rates are Impacting State Budgets"


The Great Recession of 2008 marked a turning point for fertility rates in the United States. Following the recession, fertility rates tumbled and have mostly continued to fall since then. According to a recent study by The Pew Charitable Trusts, every state except for North Dakota experienced losses in fertility rate when the most recently published 2020 rates are compared to averages over the decade ending in 2010.

Fertility rate decline is just one of several demographic pressures that states are currently facing. In addition to recent declines in international migration and life expectancy, the broader aging of the population and the large-scale exit of Baby Boomers from the workforce will pose challenges to states over the long term. State budgets have started to feel the effects of this long-term decline in fertility, with smaller working-age populations threatening tax bases.

Fewer births could yield cost savings for some areas such as drops in school enrollment, but over the long-term, governments may face resource challenges with a smaller pool of workers likely suppressing income, sales, and other tax revenue sources. The severity of the declines over the past decade varies greatly, with Western states generally experiencing the most severe fertility rate drops. Some states are more vulnerable to potential budget pressures than others because of their tax structures, economies, and ability to attract working-age residents via migration.

The future course of fertility represents a key source of fiscal uncertainty for states. Governments must start to plan for the long-term consequences of declining fertility rates, and find ways to mitigate the potential negative impacts on tax revenues. This could include policies aimed at encouraging childbearing, immigration, or economic development that would attract working-age residents.

It's clear that declining fertility rates will have far-reaching consequences for state budgets, and as such, it's important that governments start to address this issue now. As the tax base shrinks, states will have to find new ways to maintain revenue and fund essential services.

In this video, we take a closer look at the long-term decline in fertility rates in the United States and its potential effects on state budgets. The Great Recession of 2008 marked a turning point for fertility rates in the US, and since then, rates have mostly continued to fall. According to a recent study by The Pew Charitable Trusts, every state except for North Dakota experienced losses in fertility rate when the most recently published 2020 rates are compared to averages over the decade ending in 2010.



We explore how fewer births could yield cost savings for some areas, such as drops in school enrollment, but over the long-term, governments may face resource challenges with a smaller pool of workers likely suppressing income, sales, and other tax revenue sources. The video also highlights how the severity of the declines over the past decade varies greatly, with Western states generally experiencing the most severe fertility rate drops, and how some states are more vulnerable to potential budget pressures than others because of their tax structures, economies, and ability to attract working-age residents via migration.




This video is a must-watch for anyone interested in understanding the demographic pressures facing the United States and the potential long-term consequences for state budgets. It's clear that declining fertility rates will have far-reaching consequences and as such, it's important that governments start to address this issue now. By understanding the demographic pressures and taking proactive steps to address them, states can ensure a brighter fiscal future for all.



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