Dean Baker

Recent Articles

New York State’s Federal Tax Dodge Is a Big Middle Finger to Republicans

Two provisions designed to offset the federal cap on SALT deductions is a big step toward fighting back against the GOP tax plan.

(AP Photo/Seth Wenig)
(AP Photo/Seth Wenig) New York Governor Andrew Cuomo on April 2, 2018. O n the last day of March, New York’s legislature approved a budget package that included two provisions designed to get around a punitive clause in the congressional Republicans’ new Tax Cuts and Jobs Act (TCJA). The TCJA included a limit of $10,000 on deductions for state and local taxes (SALT). While this could be justified as an effort at fairness, since higher-income taxpayers are more likely to take the SALT deduction and are much more likely to pay SALT taxes in excess of $10,000, this was first and foremost an effort to penalize relatively liberal states like New York. These states have higher taxes for the simple reason that they provide better public services than low-tax states like Arkansas and Mississippi. This shows up both in the form of collective consumption in areas like education and infrastructure, but even more importantly in social safety net spending. According to the Center for Budget and...

Rubbing SALT in the Wounds of Republicans

Democratic states can nullify the GOP’s war on them by altering their employer-side payroll taxes.

Albin Lohr-Jones/Sipa via AP Images
Albin Lohr-Jones/Sipa via AP Images A demonstrator holds a sign at a rally in opposition to the Republican tax bill held in Lower Manhattan T here is little question that the Republicans in Congress were quite explicitly targeting high-tax blue states with their decision to severely limit the deductions for state and local taxes (SALT). Putting a cap of $10,000 on these deductions can add thousands of dollars to the tax bills of many upper middle class people living in relatively high-tax states like California or New York. As a result, these states will feel considerable pressure from a politically powerful bloc to lower taxes, which will then necessitate cutbacks in areas like education and health care. Fortunately, there are ways to undermine the Republican effort. An obvious one is to partially replace the state income tax with an employer side payroll tax. This can lead to a situation in which the state tax on wage income ends up being fully deductible against federal income...

On Generational Equity, Healthcare, and Keynesian Economics

Dean Baker responds to his forum counterparts.

div#sidebar-first { margin-top:1610px; } div.introduction { position:absolute; width:285px; left:675px; margin-top:1150px !important; padding:15px; border:1px solid #cccccc; height:300px; overflow-y:scroll; } div.introduction p { font-size:12px !important; line-height:18px !important; font-family: 'droid sans'; } div#table-of-contents { display:block; margin-top:0px; } #table-of-contents { position:absolute; width:285px; left:675px; padding:15px; border:1px solid #cccccc; } #table-of-contents h4 { font-size:28px; text-align:center; font-family:'Oswald', sans-serif;; } #table-of-contents p { font-family: 'Oswald', sans-serif; } Table of Contents Introduction: The Future of the Social Safety Net Triumph and Tribulation Henry Aaron When Public Opinions Collide Andrew Levison Social Insurance: The Real Crisis Robert Kuttner Thoughts on a Center-Left Entitlements Strategy William Galston Fiscal Policy, the Long-Term Budget, and Inequality Dean Baker "Entitlements" Are Just a Budget...

Fiscal Policy, the Long-Term Budget, and Inequality

div#sidebar-first { margin-top:1610px; } div.introduction { position:absolute; width:285px; left:675px; margin-top:1150px !important; padding:15px; border:1px solid #cccccc; height:300px; overflow-y:scroll; } div.introduction p { font-size:12px !important; line-height:18px !important; font-family: 'droid sans'; } div#table-of-contents { display:block; margin-top:0px; } #table-of-contents { position:absolute; width:285px; left:675px; padding:15px; border:1px solid #cccccc; } #table-of-contents h4 { font-size:28px; text-align:center; font-family:'Oswald', sans-serif;; } #table-of-contents p { font-family: 'Oswald', sans-serif; } Table of Contents Introduction: The Future of the Social Safety Net Triumph and Tribulation Henry Aaron When Public Opinions Collide Andrew Levison Social Insurance: The Real Crisis Robert Kuttner Thoughts on a Center-Left Entitlements Strategy William Galston Fiscal Policy, the Long-Term Budget, and Inequality Dean Baker "Entitlements" Are Just a Budget...

Fix the Economy, Not the Deficit

AP Photo/Charles Dharapak
AP Photo/Charles Dharapak President Obama discuses the sequester last week surounded by emergency responders, whom the White House says could be affected if state and local governments lose federal money as a result of budget cuts. I t’s hard to be happy about the prospect of the sequester—the huge, automatics cuts to domestic spending set to take place if lawmakers can't reach a long-term budget deal—going into effect at the end of the week. Not only will it will mean substantial cuts to important programs; it will be a further drag on an already weak economy, shaving 0.6 percentage points off our growth rate. The end of the payroll tax cut, which expired on January 1, has already pushed it down to around 2.0, but the sequester cuts will depress it below the rate needed to keep pace with those entering the labor market. As a result, we are likely to see a modest increase in unemployment over the course of the year if the cuts are left in place. Of course, it could be worse. Half of...

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