Stiglitz To Paterson: Raise Taxes On Wealthy Instead Of Cutting Expenditures

Stiglitz knows tax policy; Paterson knows the NYS Leg. (0.00 / 0)

First off, let me just say how VERY happy I am that Paterson is consulting Stiglitz.  Compare and contrast with, say, would-be POTUS McCain saying he's "Got Friedman's book."

These are two of the best intellects of our time, IMO.  That said, they know about two different areas-- and I sincerely believe they are both right.  To somebody not living in an Albany Legislature bubble, which is most of NY, the millionaire's tax and the circuit breaker approach to capping property taxes make total sense.  They were favored by a majority of NYers in a recent poll, even.

But, to a legislator currently running for reelection, discussing publicly raising taxes on the wealthy (who are also very generous campaign contributors) is verboten. (Fix for this situation: Clean Money Clean Elections!)

Stiglitz has had the outline of what needs doing on the Fiscal Policy Institute's website since before Paterson was Governor.  We've know it needs doing (undoing?) since Pataki did it.

Trust the man a bit.  Paterson will, in fact, get us there.  But, it can't be before we do some serious facing-up to how bad things really are.  Paterson is right-- increase taxes now, and pols will run out and promise new spending.  We have got to do what's right-- appeal to the feds to do the stimulus package they should have done the first time, cut out whatever we can to make clear that State government is not holding itself immune from shared sacrifice, and then (which, by then, will be too close to election time to make much in the way of new spending promises) ennact a circuit-breaker approach to property taxes and a millionaire's tax.

Least, that's how it looks to me from here.

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by: robinia @ Thu Jul 31, 2008 at 14:36:32 PM CDT

Run a deficit (0.00 / 0)

The point of Stiglitz is that the state should be spending not cutting spending. Since we are in a recession the best way for government to combat it is to spend money which creates jobs, goes to the purchase of equipment and gets money moving in the economy. Taxing the wealthy does not really reduce economic activity it simply moves money from one economic actor to another. It probably helps the economy since a lot of that money from taxes on the wealthy would otherwise be saved instead of spent. By cutting spending Paterson there is a chance this will make the recession worse because it is a contraction of economic activity.

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by: bender @ Tue Oct 14, 2008 at 11:22:32 AM CDT

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Great stuff here (0.00 / 0)

But I don't think this is an either/or situation- we are going to have to raise taxes on the wealthy and also make some efficiency cuts- the size of the deficit is too big to do just one.

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by: Roatti @ Thu Jul 31, 2008 at 22:47:05 PM CDT

Agreed (4.00 / 2)

But I think what Stiglitz is saying is that it is better to start with the raising of taxes than it is to use the raising of taxes as a last resort. That is exactly what Paterson is doing - using the raising of taxes as a last resort. While cutting spending is good, you still to bring in revenues. You can't just say you are going to cut spending and then not produce any new revenues. This is a problem at the state level and with local municipalities as well.

Support our troops, not the war.

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by: robert.harding @ Thu Jul 31, 2008 at 23:02:28 PM CDT

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Absolutely correct (0.00 / 0)

 

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by: Klugstah @ Fri Aug 01, 2008 at 02:06:47 AM CDT

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hmmm. (4.00 / 1)

Classic Keynesianism would have the Federal government running a deficit to forestall cutbacks at the state and local level.  An economic downturn is not a good time to raise taxes, generally, as you want more money circulating in the private sector.  Most of what I have read from Stiglitz has focused on why we should not cut back on public services-- which we should not-- but, rather, increase them in economically challenging times.  Such as, raise levels of LI-HEAP, help out families facing foreclosure, extend unemployment benefits.  All the things Paterson went to Washington to suggest.

But, Roatti is right, we will need both.  And, we will need economic development/restructuring to find honest work for all those financial sector employees who are losing jobs.

The other thing that Stiglitz has been talking about a lot recently is the humongous waste of resources-- way into the future, too-- that the Iraq War for Oil represents.  The green economy is the key to future prosperity.... while fighting over the remaining fossil fuel represents the path to decline into, well, hell.

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by: robinia @ Fri Aug 01, 2008 at 05:41:35 AM CDT

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I agree (0.00 / 0)

The government should be spending not cutting back. As for the Iraq war. It represents a waste of resources. The federal government could take some of the money it is using in Iraq and give the states aid since the states are being forced to cut back due to balanced budget laws.

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by: bender @ Tue Oct 14, 2008 at 11:25:29 AM CDT

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