States are Cutting Low-Income Programs in Response to Fiscal Crisis

Résumé du livre

The authors review the options for states facing budget troubles and suggest that increasing taes on upper-income taxpayers would be less harmful to state economies than cutting budgets. Reducing spending on programs that assist low-income people tends to reduce consumption by the full amount of the spending reduction, they suggest. However, the authors say, upper-income taxpayers do not spend all that they earn, so taxing them does not reduce consumption by the full amount of the tax increase.