Groups makes dubious claim of tax increase
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share thisTo the editor: The Harrisburg-based Commonwealth Foundation is making the dubious claim that an increase in the personal income tax will cost Pennsylvania tens of thousands of jobs ("Local Reps: Now is Not the Time," June 17, 2009).
Independent researchers have said the economic model used by the foundation should not be used for forecasting the number of jobs that will be gained or lost by a tax change. More importantly, this model explicitly and deliberately ignores the economic benefits of public sector spending, including the fact that state funds create jobs in hospitals, schools, nursing homes and road construction. The model only counts jobs its creators like, not jobs they don't.
Nobel Prize-winning economist Joseph Stiglitz and Peter Orszag, now the director of the U.S. Office of Management and Budget, wrote during the last recession that "economic analysis suggests that tax increases would not in general be more harmful to the economy than spending reductions." A balanced approach is necessary when looking at the impact of budget cuts and tax increases. Compared to deeply cutting vital services and shifting costs to local taxpayers, a modest increase in the personal income tax rate is the least harmful choice for Pennsylvanians.
Michael Wood
Research Director
Pennsylvania Budget and Policy Center
Harrisburg
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