Tax revenues, in the main, rose slightly as a fraction of GDP in wealthier nations despite the existence of the Wuhan Virus situation.

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.

Novel indeed. According to the Organization for Economic Cooperation and Development,

revenues across its 38 members rose to 33.5% of gross domestic product in 2020 from 33.4% in 2019. In the wake of the global financial crisis, revenues in 2009 fell to 31.8% of GDP from 32.6% of GDP in 2008.

And

In both instances, tax revenues and total economic output fell, but in 2020 the former declined less sharply than the latter.

These…economists…lay off the outcome of the 2020 situation to impacts on jobs.

Employment reductions in 2020 were concentrated at the lower end of the income distribution, as were falls in working hours.  This limited the impact of the Covid-19 crisis on revenues relative to the GFC [global financial crisis], in which job losses and reductions in working hours were more evenly spread.

But this is an outcome, and the economists of the OECD have mischaracterized the cause.

Look at the two examples the OECD cited for its comparison. The “global financial crisis” of 2009 was an economic event that was driven by purely economic factors—in that case, a credit crunch. The economic conditions of 2020 were driven, not by the prevalence of the Wuhan Virus, but by governments’ (over)reaction to the virus, not from the virus.

That political reaction—lockdowns, restrictions on movements, vaccine requirements levied on businesses by governments—differentially impacted economies in the manner indicated. Of course wealthier nations fared better than less wealthy ones. The less wealthy are far more dependent on those low-paying jobs.

Recall the SALT—State and Local Taxes—deduction, capped at $10,000 under the Trump income tax reform of a few years ago. Keep in mind the current debate among Progressive-Democrats about whether to raise the cap to $80,000, or higher, or eliminate the cap altogether. Set aside the debate centering on how much lifting the cap would aid essentially exclusively the Evil Rich vs most of those Evil Rich are heavy donors to various Progressive-Democrat politicians.

Consider instead that

some of America’s top earners—including private-equity managers and law firm partners—are already legally circumventing the cap on much of their income.
That is because state governments and the Trump administration blessed a cap workaround for owners of closely held businesses that is proliferating around the country.

That workaround is quite byzantine, too.

Here’s how it works. Normally, so-called pass-through businesses such as partnerships and S corporations don’t pay taxes themselves. Instead, they pass earnings through to their owners, who report income on individual tax returns. That subjects them to state individual income taxes—and the federal limit on deducting more than $10,000, created in the 2017 tax law.
Details vary by state, but the workaround flips that concept. The states impose taxes—often optional—on pass-through entities that are roughly equal to their owners’ state income taxes. Those taxes then get deducted before income flows to the business owners.
The laws then use tax credits or other mechanisms to absolve owners of their individual income-tax liabilities from business income. Thus, they satisfy state income-tax obligations without generating individual state income-tax deductions subject to the federal cap.

The SALT cap was well intended, if set too high at $10k. However, both the SALT and these convoluted workarounds illustrate the foolishness of using our tax code for social engineering and other political purposes instead of simply to raise revenue to cover the few Constitutionally mandated spending purposes.

One low, flat rate tax on income from all sources would simplify things immensely, with no negative impact on revenues for the government. And it would reduce the cost of compliance, with an associated reduction, however small, in end prices to consumers.