Morgan Stanley CFO: Raise Taxes on Wealthy

The U.S. cannot cut its "way to greatness," says Ruth Porat at a New York conference

Morgan Stanley headquarters in Times Square. (Photo: AP) Morgan Stanley headquarters in Times Square. (Photo: AP)

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Morgan Stanley CFO Ruth Porat said Saturday that the wealthy should be expected to pay more taxes given the fiscal and economic issues facing both the United States and the world. She made her remarks at a conference hosted by The Economist magazine in New York.

"The wealthiest can afford to pay more in taxes. That's a part of the deal. That makes sense. I don't know anyone that doesn't agree with that," said Porat, as reported by the Huffington Post. "The wealth disparity between the lowest and the highest continues to expand, and that's inappropriate."

Porat became chief financial officer of Morgan Stanley (MS), which includes about 17,300 financial advisors, in early 2010. Previously, she was the global head of the firm’s financial institutions group.

"We cannot cut our way to greatness," she also said at the conference.

In her presentation, Porat explained that the global markets are greatly stressed, and that banks are more focused on paying down debt than on lending, according to the report in the Huffington Post.

As for global economic confidence, the Porat believes it will hit bottom next year, but the eurozone should be able to avoid a breakup through further fiscal integration.

If U.S. companies regain confidence, the country could experience an economic recovery next year, she also noted. "Where there's any sort of sense that we're turning the corner, you'll see a lot of cash coming in," said Porat. "There is this cash on the sidelines waiting to be put to work."

Another important ingredient for a recovery, according to Porat, is resolution of the current high level of political polarization.

Early last week, government expert Andrew Friedman of Washington Update released a whitepaper that outlined a number of scenarios that could take place following the congressional supercommittee’s failure to meet its recent deficit-cutting deadline last week.

Though many politicians are against a massive tax increase, it could still take effect in 2013, according to Friedman, given how unlikely any other deal between the president and the current Congress is expected to be.

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