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To Tax or Not to Tax…That is the Question for NY Lawmakers

November 17, 2008

Albany, NY — Gov. David A. Paterson says raising taxes would only "exacerbate the problem," so they are off the table for tomorrow's special legislative session called to deal with the state's mid-year deficit. But Center for Working Families director Jason Angell says not so fast. It's a myth that raising taxes always hurts the economy, Angell says, pointing to the Center's studies of the 15 states that have higher personal income tax rates than New York. Rather than driving business away, those states have enjoyed seven years of economic growth, he points out.

"All of them experienced positive private-sector job growth, with an average growth rate of over six percent. So it's not true that if you raise income tax rates it's automatically going to hurt the economy."

The state budget office estimates New York has a $1.5 billion mid-year shortfall. Gov. Paterson is proposing $2 billion in cuts to programs like education and health care. Angell says reducing government spending during a recession is more likely to hurt the economy than would increasing the income tax for certain income groups.

Late last month, the governor told Washington, D.C., lawmakers that "hundreds of thousands" of New Yorkers might flee the state unless some taxes were cut. Angell urges Paterson to look at New Jersey, which recently increased taxes on people making more than $500,000 a year.

"In New Jersey, the number of half-millionaires grew by 70 percent, and that's who the income tax increase was on. People don't leave a state just because of their income tax rate--they care about the things that those tax revenues pay for, such as good schools, safe neighborhoods, affordable health care and affordable housing."

Angell notes that New York also experienced job growth after the temporary income tax hike in 2003.

Michael Clifford/Mike Clifford, Public News Service - NY