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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.

#21

Post by subwindow »

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…

The problem with the economy right now is not that there isn't enough money to fund corporations, it's that the average person isn't making enough regular income.

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

#22

Post by kschrader »

Does anyone else find the entire premise flawed? If all he wanted to do was maximize the amount of income he's going to pass on to his children then he would be an investment banker, not a Harvard professor/author. Any bank would take him in an instant.

Trying to make it sound like $1000 is the only incentive in play here seems like a mild distortion at the very least.

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

#24

Post by rikthevik »

My girlfriend works 4 days at as a pharmacist. Her income for working a fifth day puts her into a high tax bracket in British Columbia and results in her making dramatically less money for that day. So she uses that time to develop herself personally and work on side projects.

I wonder if a flat income tax could ever work. No more bitching and whining - everyone pays the same percentage of their income and that's the end of it.

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

#25

Post by Teckla »

If the Bush tax cuts for the wealthy are extended, it means the U.S. must continue to borrow greater sums of money than it otherwise would have to, in order to pay for those extended tax cuts.

This is one area where Democrats and Republicans should agree. The Bush tax cuts for the wealthy are simply not fiscally conservative.

The author expresses concern about the future for his children. Perhaps the author should consider that his children will have a higher tax/debt burden in the future if the U.S. keeps borrowing so much money.

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

#26

Post by rythie »

aarghh wrote: post #23

The fundamental fallacy here is that people respond purely to monetary incentives for work. This may be true for Mr. Mankiw, but it is not a universal truth.

If that were true wouldn't he just do the extra work for free, then he can take his pick of the very best/interesting jobs that way. The government would take most of it in tax anyway as he points out. Of course the downside to the government is that it doesn't get all that tax revenue.

If a friend said to me, can you talk at this conference, I'll pay you $1000, but really money is tight and then I say I'll only get $100 of it out anyway - then I'm just going to say wave the fee aren't I? Assuming I want to do it.

Or even just give the fee directly to charity? (at least in the U.K. this avoids tax)

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

#27

Post by jseliger »

kschrader wrote: post #22

Does anyone else find the entire premise flawed? If all he wanted to do was maximize the amount of income he's going to pass on to his children then he would be an investment banker, not a Harvard professor/author. Any bank would take him in an instant. Trying to make it sound like $1000 is the only incentive in play here seems like a mild distortion at the very least.

If all he wanted to do was maximize the amount of income he's going to pass on to his children then he would be an investment banker, not a Harvard professor/author.

The question is whether he'll act at his present margin (http://en.wikipedia.org/wiki/Margin_%28economics%29) , not whether he's spent his entire life trying to maximize one opportunity.

In any event, his bigger point is that a lot of service professionals in particular (think doctors, lawyers, consultants) will make decisions based in part on tax rates. For example, ten years years ago my parents routinely basically stopped working in mid November when they hit the top marginal tax rate essentially because the cost of work got too high (we do grant writing for nonprofit and public agencies, if you're curious: http://blog.seliger.com). A lot of people have a fair amount of discretion in the amount of work they do, and if you tax them a lot on the last 10 – 30% of income... they'll probably choose to consume less of it.

This is related to the backwards bending labor curve: http://www.amosweb.com/cgi-bin/awb_nav.pl?s=gls&c=dsp&#3... .

I assume people have done research to examine how large these effects are in the real world, but I don't know of any off the top of my head. I would also guess that the effects change in the short- and long-term.

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

#28

Post by jseliger »

rikthevik wrote: post #24

My girlfriend works 4 days at as a pharmacist. Her income for working a fifth day puts her into a high tax bracket in British Columbia and results in her making dramatically less money for that day. So she uses that time to develop herself personally and work on side projects. I wonder if a flat income tax could ever work. No more bitching and whining - everyone pays the same percentage of their income and that's the…

This is some of what I describe here: http://news.ycombinator.com/item?id=1777371 . Thanks for another example of it.

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

#29

Post by pandafood »

tptacek wrote: post #20
fennecfoxen wrote: post #14

Earlier quoted context omitted.

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 wo…

Most of those other countries have pretty dismal mathematical output. Not only that, but the country with the best mathematical output of the ones you listed is the UK, which I think has the most "American" tax code. Whenever anyone produces a good mathematician, that mathematician seems to always come to the US. There's a reason Terrence Tao didn't stay in Australia. I'm not actually saying that this is because of our lower tax rate, I'm just pointing out what you likely already knew but disregarded to make a point.

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

#30

Post by zdw »

rikthevik wrote: post #24

My girlfriend works 4 days at as a pharmacist. Her income for working a fifth day puts her into a high tax bracket in British Columbia and results in her making dramatically less money for that day. So she uses that time to develop herself personally and work on side projects. I wonder if a flat income tax could ever work. No more bitching and whining - everyone pays the same percentage of their income and that's the…

A flat income tax percentage would work if we could all pay a flat percentage for all our basic needs like food and living expenses.

For extra credit, explain why all of the above doesn't make sense.

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