The New York Fed Suggests Taxing the Rich to Save State Budgets
Courtesy of Jr. Deputy Accountant
I had no idea the NY Fed was populated with wealth-hating liberals. Shows what I know.
Federal Reserve Bank of New York researchers said states facing budget deficits should consider temporarily raising income taxes on their wealthiest residents and relying more on sales taxes to make up the shortfalls.
In a report issued today focusing on the recession’s impact on the budgets of New York and New Jersey, the Fed branch also recommended the states create “rainy day” funds to protect against future revenue gaps, plan in advance for spending cuts and reduce reliance on personal income taxes, which are affected by changes in the economy.
“One approach to smoothing revenue streams is to reduce reliance on cyclically sensitive tax bases and raise revenues from less-volatile sources, notably sales taxes,” wrote Richard Deitz, Andrew Haughwout and Charles Steindel, the co-authors of the report.
“Temporarily raising income taxes on high-income households during a downturn” would have the advantage of placing “a larger burden on households that are less liquidity- constrained,” they said. The tax would be removed once the economy begins to improve.
I agree with the sales tax idea as it is a "voluntary" tax. If you don’t want to pay it, don’t buy it. As for taxing the rich? Um… yeah. That tends not to work out well if you want the rich to stick around and pay. I don’t care if New York and New Jersey go for the class war agenda but they might if that fails miserably and all the money leaves for Oregon or Nevada where it’s cheap.
