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September 06, 2007


Giuliani claimed that he raised city revenues in NY during his mayorship by cutting taxes in the debate last night.

I don't remember any of the other candidates rebuking him either.

McArdle is clearly a liberal ploy designed to make conservatives appear foolsih.

What Giuliani said was this: "It is my intention to lower taxes. I have without any doubt of all the people running for president the strongest record of lowering taxes. I did it 23 times in a city that never lowered a tax before. Well over $9 billion. I lowered the personal income tax 25 percent, and I was collecting 40 percent more in revenues from the lower tax than the higher tax. I made supply-side economics work in a city that didn't understand it. And I ended up having a very positive impact on the economy of the city as the result of that."

It's worth noting that supply-side economics might very well work in a city or state but not work on a national level. Cities and states compete with one another for high-income residents and for businesses.

Before Giuliani, New York City was notoriously a high-tax environment, and many high-income individuals had abandoned New York City in favor of New Jersey, Connecticut, Westchester County and Long Island, all of which offered lower taxes. That tax cuts in New York City might have resulted in a greater mix of higher-income residents with consequent increase in revenues is not at all improbable. Of course, it's impossible to say with certainty whether the reason people returned to the City was lower taxes, lower crime, or other factors.

The difficulty of transposing the lessons of local finance onto a national scale is evident, since a far smaller percentage of Americans is in a position to choose to reside outside the U.S. than is the case for city residents. Giuliani may be worthy of criticism for being overly simplistic on that point. But the factual claims that Giuliani made probably are unassailable.

Fair point about the differences in scale Rob, but I thought Giuliani's clear implication was that he supported federal tax cuts to boost revenue. I wasn't saying that he didn't both cut taxes in NYC and raise revenues, my point was that he was apparently endorsing the wisdom of supply-side as a presidential candidate.

It's also worth noting the larger economic environment in which NYC's revenues rose, which is to say the roaring nineties. Wall Street was making lots of money for reasons unrelated to Rudy.

Here's one from last night's Republican debate.

I think it’s very clear that the increase in revenue that we’ve experienced is directly related to the tax cuts that were enacted, and they need to be made permanent rather than the family budgets and businesses being uncertain about their future.

From the NYT transcript.

Ah Brendan, another good bit of detective work! Thanks for your research on this.

Shorter Megan: "When Bush and Cheney tell us why they're doing something, THEY'RE FUCKING US. And then they don't even call. Why did we ever agree to a 3-some with those guys?"

The rising local tax revenues during the Giuliani administration were a minor local ripple, due to the rising stock market, of the Clinton economy, which was NOT a supply side economy.

Supply side or not, I strongly object to ANY tax increase on this notion alone: Congress and the Executive branch are doing a very poor job of spending MY tax money. Until they can exercise some actual fiscal constraint, the economic contretemps over supply-side validity is silly and pointless.

Megan McArdle is a shame to the Atlantic. All those intellectual backflips to defend... what exactly? I'm already growing tired of having to read blog posts from around the world decimating her talking points.

Why couldn't the Atlantic hire a real economist, instead of essentially a heavily biased, innumerate essayist?

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