Tax Cuts, Economic Stimulus, and a Tanked Budget
Monday, March 3, 2008
Harrisburg, PA – Tax cuts to the rescue? Maybe not. A new analysis shows Pennsylvania should hold off on swooping in with that proposed plan in light of state budget woes according to the Center on Budget and Policy Priorities.
Report author Nick Johnson says cutting taxes can help revive economies when done on the federal level, but he says that only works because the federal budget can carry a deficit to finance the cuts.
"Pennsylvania has to balance its budget year in and year out. So, any money that goes out in the form of tax cuts has to come from somewhere else."
Johnson believes cutting health care safety nets and other state programs to "pay" for state tax cuts is bad timing because those state systems help carry people successfully through a slow economy.
He says while increasing the federal deficit is a valid concern, sometimes it has to be done and it's good the country has that flexibility.
"The thinking is the prospect of a national recession is such a concern that you worry about the deficit later."
For more information on the analysis from Center on Budget and Policy Priorities, visit www.cbpp.org.
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