Taxes Up or Spending Down?

Governor Paterson is weighing options, including the ever-popular tax increase and spending decrease. When asked if a tax hike would come about in the future, Governor Paterson said that an increase would be a “last resort".

By: Lucy Stanton

It's encouraging to know that, even if Governor Paterson doesn't have the answer, he's willing to ask for help. That's why, with the recent worries over the state's disastrous finances growing more and more prominent each day, the Governor has sought the advice of one of the most recognized economists in the world, and Nobel Prize winner Joseph Stiglitz.

However, even though the governor sought the advice of the popular economist, he isn't blindly taking the counselor's advice, either. Governor Paterson is weighing options, including the ever-popular tax increase and spending decrease. When asked if a tax hike would come about in the future, Governor Paterson said that an increase would be a “last resort”. Historically, according to Governor Paterson, any increase in taxes has been offset by increased government spending, as well. Governor Paterson has state that, “...when you start taxing, people start thinking of ways of spending money that you taxed.”

Mr. Stiglitz, according to reports, has recommended that taxes be increased. Mr. Stiglitz believes that to be a preferable choice than decreasing governmental spending. The reason, according the the famed economist, is that the money from governmental spending enters the marketplace almost immediately, which has a greater economic impact. According to Stiglitz, “...economic theory and evidence gives a clear and unambiguous answer; it is economically preferable to raise taxes on those with high incomes than to cut state expenditures.”In the interim, until a plan can be finalized, Governor Paterson has said that he will institute a statewide hiring freeze, and trim departmental budgets by 7 percent.