• Posted March 11, 2026

Study Links State Taxes to COVID Lockdown Decisions

During the early months of the COVID-19 pandemic, states that rely heavily on sales tax revenue were more likely to end stay-at-home orders sooner, a new study finds.

Researchers say the findings hint that financial pressures may have played a role in how long some states kept strict rules in place.

“For this study, we looked at a host of state data – and it is important to note that observational studies cannot prove causation,” said study co-author Nathan Goldman, an associate professor of accounting at North Carolina State University in Raleigh. 

"However, we did find a very strong correlation between a state’s sources of revenue and its public-health policies during the early days of the pandemic," Goldman added in a news release.

State tax systems vary widely. Some rely heavily on sales taxes, which come from purchases made by consumers. Others depend more on income taxes.

For example, Washington state has no income tax but charges a 6.5% state sales tax. 

Neighboring Oregon, meanwhile, has no sales tax but has a progressive income tax that tops out at 9.9%.

“The pandemic created a situation where people were staying home and many businesses were closed,” Goldman said. “We wanted to see how tax policy, coupled with the pandemic, may have influenced other policy decisions.”

In the study, published March 7 in the journal Contemporary Accounting Research, researchers studied data from all 50 states and Washington, D.C.

They looked at how tax revenue was collected in each state and compared that with three major public health policies used early in the pandemic:

• Stay-at-home orders

• Restaurant closures

• Bar closures

The researchers also considered other factors that could affect decision-making. Among them: the governor’s political party, past election results, population size and density, unemployment, poverty rates, minimum wage and geographic region.

“We wanted to account for those variables because they are indicators of conservative political orientation, which could also inform policy decisions on things like stay-at-home orders,” Goldman explained.

Researchers saw a clear pattern in the data: States without a sales tax tended to keep lockdown orders in place longer.

Meanwhile, states that collected a larger share of their revenue from sales taxes generally ended stay-at-home orders sooner.

The team found similar results in other countries.

“We conducted similar analyses at the national level for countries in the European Union and found the same correlation,” Goldman said. “We also looked at county-by-county data for the states of Virginia and Georgia – and, again, the correlation was there."

The takeaway?

“Studies like this one underscore the complex set of issues that inform public-health decisions and could shed light on how tax policies can constrain or influence policy issues seemingly unrelated to state revenue," Goldman concluded.

More information

Investopedia explains how sales tax works.

SOURCE: North Carolina State University, news release, March 9, 2026