The eminent and distinguished N. Gregory Mankiw, a professor of economics at Harvard and former White House aide (under GW Bush) presented one of the most convoluted and misleading antitax arguments in the history of the dismal science Oct. 10. His New York Times piece argues that the effective tax rate on his marginal income is 90 percent, and because of that, if the Bush tax cuts on the rich expire, he isn’t likely to write any more articles.
That’s yet another wonderful reason to raise his taxes. The less of this crap the world has to deal with the better.
Kevin Drum has a nice takedown in Mojo, but the biggest problem with Mankiw isn’t that he compounds his tax liability over 30 years to make things look worse. It’s that he starts his article with the assumption that he should pay zero taxes — and so should corporations — and there should be no estate tax (which it’s highly unlikely Mankiw will have to pay anyway).
Yes: The difference between paying zero taxes and paying 39.5 percent is significant. The money the profressor would earn 30 years from now on a $1,000 investment if there were no corporate taxes would indeed be higher. But there would also be no streets for him to drive on, no police and fire departments to protect his house, no unemployment benefits to keep the people who aren’t as fortunate as him from breaking down his door to get food for their kids, no social security, no medical care for indigent sick people, no federal funding for the scientific research he and his colleagues do at Harvard … in other words, not much of a country. I don’t think even Mankiw wants to live there.
So what’s the difference in his life if his taxes go up — as proposed — from 35 percent to 39.6 percent? Well, on the $1,000 article, he’d pay an extra $46 in taxes. Big fucking whoop. He probably spends more than that on lunch at the Harvard Club. Even if he invested that $46 for 30 years — AND there were no corporate taxes, AND he got 8 percent a year in the stock market (which remained stable despite the massive social upheaval caused by a society with inadequate tax revenue to provide basic public services), we’re talking $462.88. That’s less than he’d get by putting $4 a year — yes, four dollars a year — into the same account.
In other words, he’d have to be pretty fucking stupid to decide not to write a $1,000 article entirely on the basis of a modest increase in taxes on someone with his level of income.
On the other hand, he clearly is pretty fucking stupid. Or else he’s smart and he’s intentionally skewing the facts to protect his own economic interest. Either way, the world will be a better place if he doesn’t write any more articles. So let’s raise his taxes.