From NY Times:
“There’s a whole lot in the water,” said Edmund J. McMahon, director of the Empire Center for New York State Policy, a conservative economic research group.
It is far from clear whether all, or any, of the proposed increases will be enacted. But the depth of the fiscal crises facing Albany, City Hall and the transportation authority has left elected officials with two main choices: slash spending or raise taxes. Increasingly, it appears that they will have to do both.
But among economists, there is much debate over whether increasing such a broad range of taxes, fees, tolls and fares — which comes as the federal government is trying to stimulate spending — could worsen the state and city economies.
Mr. McMahon, for one, believes it will. “It’s not a great idea to raise any taxes in a recession,” he said.
Many liberal economists call sales taxes and fare increases regressive because they take a bigger proportion out of the incomes of poorer people. They have urged the governor and mayor to raise taxes on the incomes of wealthier people, instead.
“This is really a very bad policy in the context of the current economic downturn,” Mr. Stiglitz said. “If you are going to raise taxes in a recession, raising sales taxes is among the worst possible ideas.”
Stephen Kagann, who was the chief economist for Gov. George E. Pataki, a Republican, agrees — but only in part. Raising any taxes, he says, would hurt the economy, blaming steady tax increases during the 1970s for exacerbating the loss of jobs in New York State.
“To raise taxes at this time, during a recession, guarantees that jobs are going to be lost in greater numbers than they would under normal circumstances,” Mr. Kagann said.
And Queens store owners are concerned about it, too.