Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

nytimes.com

Post reply on HN
Print view View original

61–70 of 94 posts

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

#61

Post by pingswept »

pg wrote: post #53
pingswept wrote: post #51

Earlier quoted context omitted.

I believe that is not the case for amounts below $13k. See http://www.nolo.com/legal-encyclopedia/article-30095.html A less comprehensible explanation is available from the IRS here: http://www.irs.gov/businesses/small/article/0,,id=108139,00....

Yes, there's an exemption. I'm talking about a marginal dollar, as he is.

If by "he," you mean Mankiw, I agree.

But I think you probably mean mikeryan. I don't think he was talking about a marginal dollar. His point was that the first $12k ($13k in 2010) gifted are taxed differently than dollars beyond that threshold.

I suppose the real question is the relative importance of the behavior at the margin versus the behavior for the first dollar. For the ultra-rich, $13k is obviously irrelevant, but for someone near the $250k annual income threshold like Mankiw, I don't think it is. The present value of $12k per year given every year for 30 years is substantially larger than the same amount invested and then hit by estate tax at year 30.

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

#62

Post by tici_88 »

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…

"While continuing to point out that the US has a lower tax burden than Denmark, Sweden, Belgium, ... Canada"

As far as Canada is concerned, this statement is false in certain cases. For example, the small business (income Income taxes rates are also lower for certain income brackets. When they lowered taxes here a few years ago, the claim was that people making $90K/year face the lowest tax rates in North America. Here is a somewhat informative table of taxes paid for various income brackets: http://www.wolrigemahon.com/txrates.html.

Where the US makes up for lost ground though is through the myriad tax deductions that are sprinkled to various special interest groups, e.g. mortgage interest deductions, etc.

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

#63

Post by pg »

pingswept wrote: post #61
pg wrote: post #53

Earlier quoted context omitted.

Yes, there's an exemption. I'm talking about a marginal dollar, as he is.

If by "he," you mean Mankiw, I agree. But I think you probably mean mikeryan. I don't think he was talking about a marginal dollar. His point was that the first $12k ($13k in 2010) gifted are taxed differently than dollars beyond that threshold. I suppose the real question is the relative importance of the behavior at the margin versus the behavior for the first dollar. For the ultra-rich, $13k is obviously irrelevan…

I mean Mankiw.

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

#64

Post by tptacek »

tici_88 wrote: post #62
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…

"While continuing to point out that the US has a lower tax burden than Denmark, Sweden, Belgium, ... Canada" As far as Canada is concerned, this statement is false in certain cases. For example, the small business (income Income taxes rates are also lower for certain income brackets. When they lowered taxes here a few years ago, the claim was that people making $90K/year face the lowest tax rates in North America. He…

It's not false in the aggregate; an equally fair argument would be to find locales in the US with miniscule property taxes and no state personal or corporate income tax (somewhere in Wyoming, presumably).

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

#65

Post by TYPE_FASTER »

Couldn't he use a LLC to avoid the estate tax? His whole argument seems overly simplified to point of being incorrect to me.

Is he talking about investing in a company that's growing 8% or is it his investment in the company that grows at 8%?

The corporate tax rate of 35% is another example. Does revenue from Google UK count towards the total revenue for Google? If so, then since Google's UK headquarters are in Ireland, the corporate tax on that revenue is more like 12.5%, unless it gets taxed again by the US.

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

#66

Post by danielsoneg »

Ok, a couple points here:

First, he's talking about the total effect of the taxes, not the marginal effect of the new taxes. Aside from being against the economist's gospel, it's also disingenuous. His tax rate isn't Zero now, it's 36%. He gives some lip service to this later, throwing out the $2000 number without really justifying it, and he doesn't mention the degree to which those taxes have gone up, just what their new value is.

Second, he gets REALLY sloppy when talking about the corporate taxes. It's along the same lines as the first problem - he's talking overall rates, not rates of change, but it's really egregious there - the 8% returns he's talking about at this point are total fantasy.

Third, and this isn't necessarily a problem with the article, just its overall premise - As a society, we may get more use out of taxing Mr. Mankiw more than we would out of his limited-reach speaking engagement. Assuming he makes $500k, a number I'm not even going to try to justify, except to say the other poor bastard of a professor who jumped into this arena was making along those lines, increasing Mr.Mankiw's taxes by 3.6% yields an additional $18k in federal income, which can be diverted to more broadly useful expenditures than hearing an economist talk. The question to me isn't "Will Mr. Mankiw work less?" - let's assume there is something of a depressing effect on his outcome - the question is, "Is this a tradeoff we should make?"

Finally, I'd point out that Mr. Mankiw's kids will also be able to make use of the services and institutions paid for by his tax money - this isn't a zero-sum game. He and his kids live in the country where his tax money gets spent. If he doesn't like what it gets spent on, well, join the club, buddy, but that's a different argument.

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

#67

Post by Anechoic »

waterlesscloud wrote: post #57
Anechoic wrote: post #52

What I don't like about Mankiw's logic is that he's only looking at part of the picture. He talks about being ble to save $1,000 without taxes vs $523 with taxes. Fine, let's look at the $1,000 - now how much of that $1,000 will he have to spend to fix damage to his car's suspension system caused by crumbling roads? How much will he have to pay for private schools because the public schools suck? How much will he hav…

Can we please stop bringing police, fire, roads, and schools into every single discussion on taxes? We all know that's not all governments spend money on. We all know there's a good deal that could be cut before these basic services are cut. We know that, so why do we insist on pretending otherwise?

We all know that's not all governments spend money on

"Police, fire, roads, and schools" are the things that affect and impact every US citizen most everyday, so it's fair to consider them. But of course governments spend money on other things - governments in the USA spend money on welfare (using the term in it's broadest sense), military/defense, health, national park, R&D in a variety of areas, interest payments, science, search & rescue, libraries/museums, workplace safety, courts, arts, media, and so on.

Yes, any of those can be cut before hitting basic services, but my premise hasn't changed - cutting most (if not all) of these will still result in a cost for individuals that people generally don't factor into what they perceive to be their in-pocket money in a no-tax/lower-tax world.

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

#68

Post by tptacek »

waterlesscloud wrote: post #57
Anechoic wrote: post #52

What I don't like about Mankiw's logic is that he's only looking at part of the picture. He talks about being ble to save $1,000 without taxes vs $523 with taxes. Fine, let's look at the $1,000 - now how much of that $1,000 will he have to spend to fix damage to his car's suspension system caused by crumbling roads? How much will he have to pay for private schools because the public schools suck? How much will he hav…

Can we please stop bringing police, fire, roads, and schools into every single discussion on taxes? We all know that's not all governments spend money on. We all know there's a good deal that could be cut before these basic services are cut. We know that, so why do we insist on pretending otherwise?

Mostly, what we spend money on is services for retirees. Then national defense.

This is highly relevant to the discussion --- moreso than fire, police, roads, etc --- because without a social safety net guaranteeing some minimal standard of living (and, particularly, health care) for our close relatives, many entrepreneurs would be forced to optimize their careers to the benefit of their relatives.

You have a point. Unfortunately it wounds the larger argument I presume you're trying to support.

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

#69

Post by jshen »

mikeryan wrote: post #17

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 t…

for the counter argument, http://news.ycombinator.com/item?id=1777366

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

#70

Post by tptacek »

jonallanharper wrote: post #58
Anechoic wrote: post #52

What I don't like about Mankiw's logic is that he's only looking at part of the picture. He talks about being ble to save $1,000 without taxes vs $523 with taxes. Fine, let's look at the $1,000 - now how much of that $1,000 will he have to spend to fix damage to his car's suspension system caused by crumbling roads? How much will he have to pay for private schools because the public schools suck? How much will he hav…

You seem to think that $10 out of $10 in taxes goes directly towards roads, schools, or whatever. In reality, about $2 out of the $10 is actually spent for the those purposes. $6 out of the $10 is a dead weight loss... completely consumed by government waste and inefficiency. The remaining $2 of the $10 is effectively transferred to bank accounts of politicians & friends via bribes, political donations, and outright…

Six dollars out of every ten dollars spent by local, state, and federal governments are dead weight loss? Cite a credible source, please.
Post reply on HN