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Tax Increases Would Cost Jobs, Mayor Warns
By Eric Lipton
Mayor Rudolph W. Giuliani, interjecting himself again into the contest to succeed him, warned yesterday that the Democratic mayoral candidates who have advocated tax increases risk hurting the city economy by forcing the elimination of thousands of jobs.
"There is no question that there is an enormous correlation between cutting taxes and jobs," Mr. Giuliani said yesterday at the Roosevelt Hotel in Midtown Manhattan. "Raising taxes
will take us back to where we used to be, which is a city that locked people in poverty." The remarks came as Mr. Giuliani presided over the release of a new study by the Manhattan Institute, a conservative research group, that concluded that city tax cuts over the past four years created about 80,000 private sector jobs, or about a fourth of overall job growth since 1997.
The study, prepared with the assistance of a Boston economist, David G. Tuerck, uses 25 years of data on city tax changes and compares them with dips or increases in employment and other variables. Out of that comparison, a formula is devised that is used to estimate how recently imposed or proposed changes in city tax rates might affect overall employment.
The report suggested that without the tax cuts imposed over the past four years, the employment growth in New York City would most likely have been just under the national average of 0.4 percent. But with more than $2 billion in tax cuts in that period, employment in the city jumped nearly 11 percent.
"In every prior economic expansion since 1950, including a couple of roaring bull markets on Wall Street, New York City has trailed annual job growth in the rest of the country," said
Edmund J. McMahon, a senior fellow at the Manhattan Institute, and the chief author of the study. "The difference this time has been tax cuts."
Based on this analysis, the same study suggested that reversing a small personal income tax cut approved this year, as Fernando Ferrer, the Bronx borough president, has advocated to help pay for after-school programs, would ultimately wipe out about 6,335 jobs.
An even larger increase in personal income tax, which Comptroller Alan G. Hevesi said he would consider if necessary to reduce class sizes and make other school improvements, could cost 24,500 jobs, the study suggested.
Mark Green, the public advocate, has said he would support "as a last resort" raising taxes to pay for police protection or improving schools, but unlike Mr. Ferrer and Mr. Hevesi he has not specified which taxes he might increase. And Peter F. Vallone, the Council speaker, has ruled out any tax increases if elected mayor.
Spokesmen for Mr. Ferrer and Mr. Hevesi defended their tax proposals yesterday, saying that regardless of the mayor's comments, more money must be invested in city schools or after-school programs, which they said had been neglected during the Giuliani administration.
"We risk losing a generation of children," said Josh Isay, a spokesman for Mr. Hevesi.
©2001 The New York Times
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