Closing budget deficits is not always the optimal fiscal policy in the short term  or the medium term. Instead, budgets should simply be seen as a tool with which to boost living standards. Sometimes policy needs to move the budget toward a deficit to achieve this; at other times, the budget needs to be moved closer to a balance or surplus.

Reducing budget deficits is too often presented as a key budgetary challenge. Defining fiscal policy this way in the present economic environment, however, is simply bad economic analysis. Instead, the most pressing economic task should be viewed as finally securing a durable return to genuine full employment.


U.S. tax law is a boon to the affluent

A new analysis of the tax law Congress passed last December shows that it will shower benefits on the most affluent Ohioans – and that making its temporary provisions permanent will add to their gains, while providing much more modest savings for most residents.

Seattle taxes ranked most unfair in Washington — a state among the harshest on the poor nationwide

A new report finds that even in Washington — a state whose tax system has been called the nation’s most unfair to the poor — Seattle manages to stand out from the pack.

The report, published this week by the Seattle-based Economic Opportunity Institute (EOI), a liberal think tank, evaluated the tax burdens for households at various income levels in 15 Washington cities. Among those cities, the report found Seattle’s taxes to be the most regressive — in other words, hard on the poor and easy on the rich.

Who Really Pays: An analysis of the tax structures in 15 cities throughout Washington State

Many Washingtonians feel they are heavily taxed. They are – if they’re working class or middle class. Wealthy residents pay a tax rate many times lower than the rates other people pay. But due to our opaque tax system, it’s hard to understand how much we pay in taxes, or how much other people are.

This report compares the tax obligations of households at the $25,000, $50,000, $75,000, $100,000, $150,000 and $250,000 income levels in Bellevue, Bellingham, Everett, Federal Way, Kent, Olympia, Pasco, Pullman, Renton, Seattle, Spokane, Tacoma, Vancouver, Wenatchee and Yakima. In Seattle, the combination of state and local taxes results in a system which relies much more heavily on taxes on the people least able to pay, while not imposing significantly higher taxes on the wealthy.

This report also compares job growth in states and cities with their income tax structures and effective tax rates on wealthy households. In neither case is there any correlation.

Effects of Federal Tax Cuts in Hawai‘i: Correcting the Record

Hawai‘i’s Department of Business, Economic Development and Tourism (DBEDT) recently released a report, “The Impact of the Federal Tax Cut and Jobs Act (TCJA) on Hawai‘i Households,” which analyzed the effects of the new federal tax law on Hawai‘i households in 2018.  This report, which was featured in an article in the Honolulu Star-Advertiser, concluded that the lowest-income taxpayers in Hawai‘i would see large savings from the TCJA, while those at the top would pay more.

We disagree.  At both the low and high ends of DBEDT’s analysis, crucial details of federal tax law appear to have been left out of their calculations. As a result, the report’s conclusions mask the actual impact of the new federal tax law on Hawai‘i taxpayers at different income levels.

 The TCJA is complicated and all of its provisions need to be considered in reporting the effects on households in Hawai‘i.  It is pretty clear that, when all the factors are included in the analysis, the TCJA significantly benefits the most affluent among us while doing almost nothing to help the people who need relief the most.