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Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

nytimes.com

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Re: Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

#11

Post by hexis »

subwindow wrote: post #6

He's ignoring the fact that having Mankiw work less may be a good thing. If Mankiw makes that $1000 for an article, he'll sock it away and it won't get spent for 10+ years. If a starving writer instead takes the job, he'll spend it immediately. I do not see the downside.

Savings with a bank would typically continue to circulate in the loans the bank makes. Even if one were to hide money under a mattress, the effect would be very, very slightly anti-inflationary (by withdrawing currency from the market), which anyone else with savings, or just cash, would appreciate.

Re: Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

#12

Post by mquander »

pandafood wrote: post #7

Arguing against higher taxes because they discourage people from working is like arguing against jailing people for drug offenses because it overcrowds jails. It could be right (though in the case of raising taxes, history doesn't seem to bear this out), but it's not the real reason that we shouldn't want to pay higher taxes. The reason is that they do bad stuff with our money. There's a sense in which it can be said…

People who want higher taxes don't agree that they do bad stuff, or they wouldn't want higher taxes.

Re: Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

#13

Post by spamizbad »

subwindow wrote: post #6

He's ignoring the fact that having Mankiw work less may be a good thing. If Mankiw makes that $1000 for an article, he'll sock it away and it won't get spent for 10+ years. If a starving writer instead takes the job, he'll spend it immediately. I do not see the downside.

> He's ignoring the fact that having Mankiw work less may be a good thing

Indeed. His tenure in the Bush administration was mediocre. Then again, he could be a great public speaker.

Re: Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

#14

Post by fennecfoxen »

tptacek wrote: post #2

Long story short: Mankiw could take a $1k speaking engagement and, after 30 years of compounding 8% (please pass on stock tips, Mankiw) growth, pass on $10,000 to his children. But because of a battery of taxes, it will only come to $1700. And because he will likely be dead after 30 years, the estate tax will chew up another $700. Therefore, he won't do the speaking engagement. "In effect, once the entire tax system…

I like the implied reasoning saying that "Other governments are willing to take a bigger slice of the fruits of your labor, so you have no grounds to complain." Except I don't, actually.

Re: Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

#15

Post by tptacek »

mmaro wrote: post #5

Out of curiosity, does anyone know what tax rates looked like in the 1800s? Zweig's 'The World of Yesterday' says it was in the single-digits in Vienna, but I'd like to have better numbers for more places.

I don't know, but it's worth pointing out that the US in 1890 was so different from the US of today as to make that an apples/oranges comparison. To draw some somewhat relevant comparisons: in the 1800s your children might very well be working in a mill to support the family, and there was no such thing as a weekend.

Re: Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

#16

Post by pandafood »

mquander wrote: post #12
pandafood wrote: post #7

Arguing against higher taxes because they discourage people from working is like arguing against jailing people for drug offenses because it overcrowds jails. It could be right (though in the case of raising taxes, history doesn't seem to bear this out), but it's not the real reason that we shouldn't want to pay higher taxes. The reason is that they do bad stuff with our money. There's a sense in which it can be said…

People who want higher taxes don't agree that they do bad stuff, or they wouldn't want higher taxes.

There are those people, and there are the people that don't know about the bad stuff. Actually, to be fair, there are also the people who know about the bad stuff but dont think lowering tax revenue is a good way to get them to stop doing the bad stuff. I think the first group of people might have a strange set of values (unless you mean that they don't think the net effect of what the government does with taxes is bad, in which case I agree with them), but it's still worth arguing about to convince the second and third groups.

Re: Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

#17

Post by mikeryan »

So if you are

A. Making over 250,000 a year

B. Not planning on spending additional income yourself, but instead planning to save that money for your children when you die.

C. Have opportunities to make (relatively) small incremental chunks of income.

D. Have the ability to sock away money at a 8% compounding rate.

It might not be worth your while to take on additional work. And this is entirely on Obama for letting the tax cuts to the $250K+ income families slip.

Re: Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

#18

Post by wiredfool »

subwindow wrote: post #6

He's ignoring the fact that having Mankiw work less may be a good thing. If Mankiw makes that $1000 for an article, he'll sock it away and it won't get spent for 10+ years. If a starving writer instead takes the job, he'll spend it immediately. I do not see the downside.

Yet, here's an article, which presumably he got paid for. Perhaps the value in the article to him is more than what he got paid for? Or perhaps his premise is wrong. (Yeah. I'm calling a Harvard Economist wrong.)

Comparing the untaxed value + 8% over 30 years to the taxed value is a straw man. I could push that horizon out another 30 years, and the 'marginal rate' would get worse. I could shorten it and it would get better. It's a meaningless number. Also, no company pays a 35% tax on the returns to their stock, they pay 35% on taxable income. There's a huge difference. Unless he's planning on dying soon, (which he's not, because of compound interest assumptions) there's no way he can tell what the estate tax is going to be. It's a crapshoot.

Roughly, the marginal change of the rollback in taxes is going to be a couple percent, though he talks about the new percentages, not the old. The net marginal change is going to be tens of dollars. If that's enough to keep him from writing articles like this, bring it on.

Re: Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

#19

Post by hdctambien »

jamesaguilar wrote: post #9
subwindow wrote: post #6

He's ignoring the fact that having Mankiw work less may be a good thing. If Mankiw makes that $1000 for an article, he'll sock it away and it won't get spent for 10+ years. If a starving writer instead takes the job, he'll spend it immediately. I do not see the downside.

A few problems with your analysis. - Money that is "socked away" in savings accounts or investment portfolios reenters the economy through lending or through decreasing cost of capital for businesses. - It is inherently better for Mankiw to write articles than it is for starving writers to do so. If anyone derived value from what the starving writer was writing, they would be getting paid for it and therefore not be…

Isn't the problem right now that people aren't spending money, though?

Banks have plenty of money to lend (see the TARP and the Fed throwing money at them). Companies have money to spend. Neither are doing anything because the economy isn't churning because people aren't spending their money. They either have no money to spend (the unemployed), or they are saving their money because they don't trust their company to not fire them/the government to not tax it away.

Today, what it seems we need is money going to people that would buy things from companies so the companies will hire people to make more of those things. And then more people can buy things from companies.

Once the economy is working again, then we can worry about rich people earning extra money and putting it in the banks for them to loan out.

Re: Greg Mankiw: I Can Afford Higher Taxes. But They’ll Make Me Work Less.

#20

Post by tptacek »

fennecfoxen wrote: post #14
tptacek wrote: post #2

Long story short: Mankiw could take a $1k speaking engagement and, after 30 years of compounding 8% (please pass on stock tips, Mankiw) growth, pass on $10,000 to his children. But because of a battery of taxes, it will only come to $1700. And because he will likely be dead after 30 years, the estate tax will chew up another $700. Therefore, he won't do the speaking engagement. "In effect, once the entire tax system…

I like the implied reasoning saying that "Other governments are willing to take a bigger slice of the fruits of your labor, so you have no grounds to complain." Except I don't, actually.

That's not the logic I'm employing, though I see why you think it is. I'd rather point out that those 26 other countries do not appear to suffer a deficit of academics like Mankiw, despite a much stronger incentive for them not to take similar speaking engagements.

Of course, the bigger flaw with Mankiw's argument is that it evades the point of those taxes, which is that they buy things that our society has deemed worth having. It is not totally outside the bounds of reason to suggest that we'd have less entrepreneurship if every potential business owner had to worry about providing for 100% of their parents medical expenses.

We cannot have everything we want. At some point, the goal of having the "Happiest Possible Greg Mankiw" will have to give way to something like Wildland Fire Management.

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