Justin Wolfers speaks with MSNBC on tax reform, fiscal cliff
With automatic federal deficit reduction measures set to take effect in January, Justin Wolfers appeared on MSNBC's "NOW with Alex Wagner" to discuss the role of tax reform in reducing the U.S. deficit. Wolfers discussed various perspectives on the effect of tax increases on the U.S. economy.
"Republicans worry a lot that the rich are going to be really responsive—they are going to stop working and stop creating jobs if you raise taxes on them," Wolfers told MSNBC. "I worry just as much about the poor. In fact, the highest effective marginal tax rates—the largest disincentives to work—are those faced by the working and middle class who are on much lower incomes. There is a real argument that if you cut taxes on them, you may actually increase labor supply, getting more people back to work."
MSNBC's Wager also asked Wolfers about the risks of Congress allowing the automatic deficit reduction measures to take effect in January.
"This is an economy that cannot afford to have four percent of our spending disappear just next year. We will see a recession next year almost for sure and for certain, and so that is the sense in which this really is something to worry about. The recovery is just faltering right now and we really don't need congress clubbing it over the head again, pushing us back down yet again."