Local governments are increasingly adopting policies that earmark taxes for mental health services, and about 30% of the U.S. population lives in a jurisdiction with such a policy, according to a new analysis published in the journal The Milbank Quarterly.
These taxes generate more than $3.57 billion each year, nearly double the amount spent by the Substance Use and Mental Health Services Administration (SAMHSA) on mental health services.
Mental health services are funded by a complex – and often insufficient – mix of federal, state and local sources in the United States. Improving access to quality mental health services is a growing priority for policy makers and the public.
To increase funding for mental health services, state and local governments have passed taxes that “earmark” or earmark revenue for mental health. For example, in 2005, the California Mental Health Services Act increased the income tax rate by 1% for households earning more than $1 million and earmarked that income for mental health services, while Washington State allowed counties to increase their sales tax rate by 0.1% to generate funds for mental health.
“The advantage of earmarked taxes is that they are often politically feasible because they ensure that revenues will be spent on specific issues of public interest, instead of being spent at the discretion of elected officials,” said Jonathan Purtle, associate professor of public health. Policy and Management at NYU School of Global Public Health, Director of Policy Research at NYU’s Global Center for Implementation Science, and lead author of the study. “Earmarked taxes can also ensure a stable revenue stream for specific issues.”
Purtle and colleagues conducted a national assessment of the use of taxes earmarked for mental health services from 2022. Using interviews and databases, they identified 207 relevant policies; 95.7% were local and 4.3% were state-level. The vast majority (95.7%) went through the ballot initiative.
They found that more than 100 million people, or about 30% of the US population, live in a jurisdiction with a mental health tax, and those taxes generate more than $3.57 billion a year.
Property taxes (73.9%) and sales taxes or fees (25.1%) were the most commonly used taxes, but policies allocating taxes to mental health services varied widely in their design, requirements in expenditures and their monitoring. Six states with recreational marijuana taxes mention the use of revenue for mental health services. Five states have passed laws to add small fees to cellphone bills to fund mental health crisis services, including 988, the new suicide and crisis lifeline.
Revenue generated from earmarked mental health taxes is substantial in many states and localities. On average, the per capita income generated by taxes was $18.59, but in 63 jurisdictions it exceeded $25 and in 12 jurisdictions it exceeded $50. For context, SAMHSA’s mental health spending in 2021, which totaled $1.8 billion, equates to $5.38 per capita among U.S. residents.
While the number of taxes earmarked for mental health has risen sharply over the past two decades, researchers have also found evidence of taxes earmarked for mental health care as early as the 1850s, as seen in Taxes land in Iowa.
“Our results illustrate an increase in state and local taxes, through ballot initiatives, to address community mental health needs that are perceived to be unmet by existing funding arrangements,” Purtle said.
Other study authors include Megan Wynecoop of New York University’s McSilver Institute, Margaret Crane of Temple University and Nicole Stadnick of the University of California, San Diego.
About NYU School of Global Public Health
At the NYU School of Global Public Health (NYU GPH), we prepare the next generation of public health pioneers with the critical thinking skills, acumen, and entrepreneurial approaches needed to reinvent the public health paradigm. Dedicated to using a non-traditional, interdisciplinary model, NYU GPH aims to improve global health through a unique blend of study, research, and practice in global public health. The school is located in the heart of New York City and spans NYU’s global network across six continents. Innovation is at the heart of our ambitious approach, our thinking and our teaching. To learn more, visit: publichealth.nyu.edu