Dean Baker

Recent Articles

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...

Tax Tricks: Time to Go on Offense

Our current tax system rewards unproductive speculation and punishes the working middle class.

(Flickr/Steven Depolo)
For three decades, progressives have been engaged in a political contest where the range of the playing field runs between our own goal line and our own 20-yard line. During the period that we have been fighting over some version of the Bush-Reagan tax cuts, the other side has focused on wiping out the labor movement, locking in regressive monetary policy, pushing a trade and currency policy explicitly designed to redistribute income upward, creating a system of intellectual-property protection that serves the same purpose, and using huge deficits to wipe out public spending. We have to continue fighting for progressive taxation, but that is no cure for the rest of the conservative agenda. If we become obsessed with tax breaks for the rich and ignore everything else, the skewing of before-tax income will become so large that even the most redistributive taxes will still leave gross inequities. Furthermore, since money puts politicians in office, in a highly unequal society,...

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