Gerald Epstein: Economists: Raise revenue to balance budget

Published: 7/5/2020 3:00:46 PM

I have joined more than 90 experts in economics and public policy from across Massachusetts in sending a letter to the leadership of the commonwealth. We argue that instead of budget cuts, the state should look to raise revenues to balance its budget.

The signers include 22 UMass Amherst faculty from the Isenberg School of Management and the Department of Economics and eight faculty from other colleges and universities in western Massachusetts.

Here is an excerpt:

“Dear Governor Baker, Speaker DeLeo and President Spilka: Massachusetts is facing enormous health and economic challenges fighting the COVID-19 pandemic ... This has caused an unexpected increase in state and local spending at exactly the same time that revenues, especially income and sales taxes, are falling.

We are concerned that (to balance the state’s budget) the state will also pursue counterproductive budget cuts. ... Cutting from housing, public transportation, and healthcare removes spending from the economy when it is most needed and from the people who need it the most and now have been disproportionately affected by COVID-19.

Cutting local aid to cities and towns for police and fire protection, parks, and public works erodes public safety and infrastructure ... reducing funding for early education, K-12 and higher education reverses our long-standing investment in human capital ... with long-run consequences for worker productivity and economic growth.

In a recession, balancing the budget by cutting spending has a more negative impact on economic growth than balancing the budget by raising taxes. Both the personal income tax and the corporate tax are fair (and better) ways to (generate revenue)…

We the undersigned encourage you to raise revenue rather than cut the social and physical infrastructure that will be necessary to protect the health and economic well-being of our people, our communities, and our Commonwealth.”

The full text of the letter and the complete list of signers can be found at: scholars.org/sites/scholars/files/MA_Economists_Letter_05262020.pdf

Gerald Epstein

Amherst

The writer is professor of economics at University of Massachusetts Amherst.

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