Economics

Tax Effects on Productivity: An Economist's Personal Analysis

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Harvard's Greg Mankiw turns his economist's microscope back on himself in the New York Times to uncover truths about productivity and taxation. To wit, if you tax something, you'll likely get less of it:

AN important issue dividing the political parties is whether to raise taxes on those earning more than $250,000 a year….

I have to acknowledge that the Democrats are right about one thing: I can afford to pay more in taxes. My income is not in the same league as superstar actors and hedge fund managers, but I have been very lucky nonetheless….

Nonetheless, as Republicans emphasize, taxes influence the decisions I make. I am regularly offered opportunities to earn extra money. It could be by talking to a business group, consulting on a legal case, giving a guest lecture, teaching summer school or writing an article. I turn down most but accept a few….

Suppose that some editor offered me $1,000 to write an article. If there were no taxes of any kind, this $1,000 of income would translate into $1,000 in extra saving. If I invested it in the stock of a company that earned, say, 8 percent a year on its capital, then 30 years from now, when I pass on, my children would inherit about $10,000. That is simply the miracle of compounding.

Now let's put taxes into the calculus. First, assuming that the Bush tax cuts expire, I would pay 39.6 percent in federal income taxes on that extra income. Beyond that, the phaseout of deductions adds 1.2 percentage points to my effective marginal tax rate. I also pay Medicare tax, which the recent health care bill is raising to 3.8 percent, starting in 2013. And in Massachusetts, I pay 5.3 percent in state income taxes, part of which I get back as a federal deduction. Putting all those taxes together, that $1,000 of pretax income becomes only $523 of saving.

And that saving no longer earns 8 percent. First, the corporation in which I have invested pays a 35 percent corporate tax on its earnings. So I get only 5.2 percent in dividends and capital gains. Then, on that income, I pay taxes at the federal and state level. As a result, I earn about 4 percent after taxes, and the $523 in saving grows to $1,700 after 30 years.

Then, when my children inherit the money, the estate tax will kick in. The marginal estate tax rate is scheduled to go as high as 55 percent next year, but Congress may reduce it a bit. Most likely, when that $1,700 enters my estate, my kids will get, at most, $1,000 of it.

HERE'S the bottom line: Without any taxes, accepting that editor's assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000. In effect, once the entire tax system is taken into account, my family's marginal tax rate is about 90 percent. Is it any wonder that I turn down most of the money-making opportunities I am offered?….

Now you might not care if I supply less of my services to the marketplace — although, because you are reading this article, you are one of my customers. But I bet there are some high-income taxpayers whose services you enjoy.

Maybe you are looking forward to a particular actor's next movie or a particular novelist's next book. Perhaps you wish that your favorite singer would have a concert near where you live. Or, someday, you may need treatment from a highly trained surgeon, or your child may need braces from the local orthodontist. Like me, these individuals respond to incentives. (Indeed, some studies report that high-income taxpayers are particularly responsive to taxes.) As they face higher tax rates, their services will be in shorter supply.

….don't let anyone fool you into thinking that when the government taxes the rich, only the rich bear the burden.

I have found that these sort of arguments have absolutely no impact on most people who want to soak the rich to help the state, but there it is, and it seems true.

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  1. Good to know I’m not the only person who feels that achieving success just isn’t worth it anymore.

    1. If it wasn’t for that damned federal government, wylie’d be a captain of industry. This line of argument is very, very convincing.

      1. Please don’t be his porn.

      2. Do that thing with your tongue again! Do it again! And again! And again! And again! And again! And again!

        1. And again! And again! And again…
          OH MY FUCKING GOD!!!

  2. Why does he compare “no taxes” vs. “bush tax cuts expire” instead of comparing “bush tax cuts expire” with “bush tax cuts extended”? Seems like that would be a more relevant argument for the current situation.

    1. Because he is trying to determine the effect “taxes” cause, not the effect of the Bush tax cuts.

      1. I guess it must be a coincidence that he begins the article referencing the current debate about raising taxes on those with incomes over $250,000.

        1. Thats the current debate…but further down he starts talking about “taxes”.

    2. Indeed. I think the article fails to convince largely on that basis.

      1. WOOSH

        And I quote:

        “taxes influence the decisions I make”

    3. Re: doomboy,

      Why does he compare “no taxes” vs. “bush tax cuts expire” instead of comparing “bush tax cuts expire” with “bush tax cuts extended”?

      What would be the difference?

      1. The difference? Well, first off you don’t get to complain about Bush. Second, you don’t get to hate on teh rich. Third, rinse and repeat until the lather is exhausted.

    4. Re: doomboy,

      The author is making an economic case against taxation on the basis of how it affects his actions. The mentioning of the expiration of the current tax rate is just to serve as a baseline for his calculations, that’s all.

  3. I have found that these sort of arguments have absolutely no impact on most people who want to soak the rich to help the state, but there it is, and it seems true.

    The reason few try to justify taxation throguh economic analysis is because taxation is not founded in economics, it is founded in politics. The only analysis you can make about taxation in the econ world is how it affects property as it is a violent transfer of property, and so far, taking property that does not belong to you is still THEFT. There’s no way to economically justify THEFT, so you justify it through political sophistry and non sequiturs.

    In other words, people already know that taxation IS theft, otherwise the government would not take property at bayonet point, it would simply receive “voluntary contributions” from us the productive, just like churches or the Red Cross receives them.

    1. Wait! Wait! According to draco, taxation is a required part of economic life!

      Where is our Chartalist poster today?

    2. You mean the likes of Gates, Soros and Buffet don’t regularly send anonymous donations to the Treasury? I’m sure even Slim wires money to help out realizing how much the US helps out his bottom line.

      I would include the Hollywood set except that they are obviously to vain to give away anything without the adoring public seeing their charity.

      1. Re: jester,

        You mean the likes of Gates, Soros and Buffet don’t regularly send anonymous donations to the Treasury?

        No, they are not sending donations, they send “rendered services payoffs.”

    3. You mean the likes of Gates, Soros and Buffet don’t regularly send anonymous donations to the Treasury? I’m sure even Slim wires money to help out realizing how much the US helps out his bottom line.

      I would include the Hollywood set except that they are obviously to vain to give away anything without the adoring public seeing their charity.

  4. Without any taxes, accepting that editor’s assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000.

    Yes, but you see, your children don’t deserve the $10,000.00, MNG dixit.

  5. I have found that these sort of arguments have absolutely no impact on most people who want to soak the rich to help the state, but there it is, and it seems true.

    It’s all luck anyway. Expending effort on training, education, and supporting his professional standing has nothing to do with it. It’s all just luck.

    1. Damn, you beat me to it.

  6. But, if we raise taxes, the economy will boom! It worked for Clinton Eisenhower, right?

    1. It worked, for me. Saved me in the 1932 election.

    2. Re: P Brooks,

      But, if we raise taxes, the economy will boom! It worked for Clinton Eisenhower, right?

      No, it did not create a boom:

      “Eisenhower’s fiscal conservatism carried a heavy price. There were three recessions during his administration–July 1953 through May 1954, August 1957 through April 1958, and April 1960 through February 1961–and real growth of the gross domestic product averaged just 2.5 percent over those eight years. In large part, that sluggish growth was due to high tax rates, not just on the wealthy but on the middle class as well. ”

      http://www.cato.org/pubs/pas/pa-192.html

      1. The “fiscal conservatism” of Eisenhower as not so much – he wanted to “balance the budget” before tackling lowering taxes. That’s like some idiot searching for a new job that pays for his wife’s spending before considering cutting her credit cards. Harding and Coolidge did BOTH – they cut spending AND lowered taxes, creating the economic boom of the 20’s.

  7. Expending effort on training, education, and supporting his professional standing has nothing to do with it. It’s all just luck.

    Fuck you, Malcolm Gladwell.

  8. I have found that these sort of arguments have absolutely no impact on most people who want to soak the rich to help the state

    The inherent whininess of the argument renders it unconvincing.

    1. Please don’t be his porn.

      1. Don’t worry – he is a bore and uninteresting.

      2. So is this a new troll, or just a new sock puppet?

    2. I’m ready for round two, snookems.

      OO=====D

  9. Your unwillingness to work harder to pay more taxes is very unpatriotic, but fortunately Judge Wesley J. Smith has just held that the cummulative affect of your failure to participate in a market has sufficient impact on interstate commerce, that Congress can force you to participate in that market. Accordingly, I will ask my lame duck congress to immediately pass legislation forcing you to take on these assignments. 90% seems like a fare share for someone like you to pay.

    1. We know this isn’t really the president because he didn’t say “Let me be clear…”

      1. There are those who claim I am not really the President…

        1. Well, just show us the birth certificate and put it to rest.

          Coward!

  10. “because you are reading this article, you are one of my customers.”

    [citation needed]

  11. “I have found that these sort of arguments have absolutely no impact on most people who want to soak the rich to help the state…”

    Reason cannot reason with faith…or envy.

  12. This rings remarkable true with me. Ten years ago I was making about $50K (inflation adjusted would be about $64K today) and I had to work overtime to make that much.

    Since then I’ve worked hard, taken on challenging assignments, etc. and this year I’ll just barely crack $100K.

    Even with my wife’s income, we’re nowhere near Obama’s magic $250K but I’ve alerady started turning down some of the overtime opportunities. I admit that I clearly don’t “need” the extra money anymore but I’m also tired of seeing a huge chunk of the overtime pay disappear to taxes. Even with today’s taxes, it’s not worth the effort. I’d rather go ride my bike.

    1. Without Obama in the White House, ‘Bikerider’ would be working like a randian superman! This line of argument is extremely convincing.

      1. You’re boring. And boorish. To boot.

        1. That’s pretty good Old Mexican. When you can’t say anything logical against an argument, talk about the tone. That kind of thing always convinces idiots.

          1. You made an argument somewhere? I missed it.

            1. I argued that people who say, “I would have worked hard, if it hadn’t been for income taxes/my ex-wife/that damn politician” are inherently sketchy people with inherently sketchy claims.

              1. Re: atheist,

                I argued that people who say, “I would have worked hard, if it hadn’t been for income taxes/my ex-wife/that damn politician” are inherently sketchy people with inherently sketchy claims.

                Nobody made such an assertion – YOU made that “argument” up. You rely on the classic “strawman argument.”

                1. Mankiw’s editorial depends on that argument. To a lesser extent, what ‘Bikerider’ said does too.

                  1. Re: atheist,

                    Mankiw’s editorial depends on that argument.

                    That’s not true. He’s making an Opportunity Cost argument, idiot.

                    1. Exactly. He’s making an oppportunity cost argument, saying that folks had better not raise his taxes, because if they do, he’ll have less opportunity to make money, and he’ll take his work away from them!

                      Like all of his kind, he greatly overestimates the worth of his own labor. But that’s not the best part. The icing on the cake is that he imagines someone trying to solve macroeconomic problems will give a fig about his petty problems, and his laughable threats.

                    2. Re: atheist,

                      He’s making an oppportunity cost argument, saying that folks had better not raise his taxes, because if they do, he’ll have less opportunity to make money, and he’ll take his work away from them!

                      That’s not what Opportunity Cost means. It doesn’t mean “opportunity to make more money.”

                      Like all of his kind, he greatly overestimates the worth of his own labor.

                      How can you tell?

                      The icing on the cake is that he imagines someone trying to solve macroeconomic problems will give a fig about his petty problems, and his laughable threats.

                      “Macroeconomic problems”?

                    3. “Macroeconomic problems”?

                      Yeah. The fact that without stimulus spending, the economy is gonna start shedding jobs again.

                    4. Re: atheist,

                      Yeah. The fact that without stimulus spending, the economy is gonna start shedding jobs again.

                      What you describe is the economic equivalent of digging a hole below a falling man to forestall his contact with the ground.

                      The economics behind spending by government are based on the fallacy of the aggregate, in which one assumes two things: That what drives the economy is consumption and that what is needed to consume is money. So, when consumer spending slows down, government officials believe they should “step in” pouring money into the economy to “stimulate.”

                      This fallacy comes from nitwits (like you) that believe money is wealth, and if you just pour money into an economy, it will be as if wealth exists to be consumed, when in fact it doesn’t (hence inflation, bubbles, interest rate distortions.)

                    5. Sorry, Old Mexican, you lost this argument back in the 1930s. Governments use stimulus spending because it works.

                      Oh, and I don’t believe that money is wealth. I understand it is simply money.

                    6. Re: atheist,

                      Sorry, Old Mexican, you lost this argument back in the 1930s. Governments use stimulus spending because it works.

                      Because it “works”? That’s it??

                      Oh, and I don’t believe that money is wealth. I understand it is simply money.

                      Then your stimulus hypothesis falls by itself. Either money stimulates the economy because it is wealth, or it does not because it is NOT wealth.

              2. Marginal utility of more money vs marginal utility of more time off. The operating word is harder not hard.

          2. Re: Atheist,

            That’s pretty good Old Mexican. When you can’t say anything logical against an argument, talk about the tone.

            You argued?

            Because I read your strawman, but I am serious enough about argumentation so as not to take yours seriously.

    2. To be “fair”, is it the taxes causing you not to take the overtime or that you value something else more than the money you would make?

      Of course, with a higher tax rate, the chance of activity X being worth more to you than the overtime is higher.

      When you were at a lower income, the marginal value of the extra work was greater than riding your bike or etc.

      1. To be honest, it’s hard to be sure.

        I’m well aware that I have a good income and, like Mankiw, I’m able to support my lifestyle (same 3 bedroom, 1 1/2 bath house since 1999, blah blah). Therefore, I have no compelling need to take on extra work.

        On the other hand, my retirement account stinks, I don’t have much saved for my kids’ college costs, and my parents need financial help. I spent most of my 20’s in school and making very little money. I “established myself” in my 30’s and finally saw growth in my income in my 40’s. Therefore, there should still be some incentive to take on extra assignments.

        So when I pass up a potential $2000 consulting assignment is it because I don’t need more money or because I’m tired of getting only $1100 in my hand?

        1. The answer depends if riding your bike is worth $1500 or $2500. 🙂

        2. To be honest, it’s hard to be sure.

          I’m well aware that I have a good income … I have no compelling need to take on extra work.

          That actually is honest, thanks.

          In general Americans besides the ultra-rich have seen their incomes stagnate over the past decade and their expenses rise. This situation applies across the board. It will probably get worse for a long time. We can either find ways of dealing with this reality, or we can blame our feelings of malaise on scapegoats such as income taxes. I would recommend the first course.

          1. Please don’t be his porn.

          2. Re: atheist,

            We can either find ways of dealing with this reality, or we can blame our feelings of malaise on scapegoats such as income taxes.

            You cannot deny economic reality – income taxes DO alter people’s actions towards less productive efforts (even if these efforts equal protecting their assets or paying accountants or lawyers), which is why there are more idle people than productive people in European countries. Indicating this fact is not looking for scapegoats.

            1. Old Mexican, a person would have to be unusually petty to change their lifestyle in response to an altered tax rate. Especially when the alteration is so small. No, Mankiw is just attempting to rationalize his dislike for Obama.

              1. Re: atheist,

                Old Mexican, a person would have to be unusually petty to change their lifestyle in response to an altered tax rate.

                What do you mean by “unusual”? Compared to what, “Usually petty”? Who says a person is petty contra non-petty? You? Me? Your cat? My dog? The gods of pettiness?

                Especially when the alteration is so small.

                So small in YOUR opinion, of course – please be clear (and honest) about it.

                No, Mankiw is just attempting to rationalize his dislike for Obama.

                Oh, so ANYONE pointing out the opportunity cost of taxation is an Obama hater in disguise?

                So, you argue??? I have my doubts.

                1. OM, you’re such a tiresome relativist, which is odd since you’re also a tiresome absolutist.

                  1. Re: Tony,

                    OM, you’re such a tiresome relativist, which is odd since you’re also a tiresome absolutist.

                    I just don’t like people who take their subjectivity as absolute.

                    By the way, what does it mean “unusually petty”? I didn’t understand that term – did you???

                    1. More petty than humans usually tend to be?

                    2. Re: Tony,

                      More petty than humans usually tend to be?

                      Great.

                    3. More petty than humans usually tend to be?

                      Right. Like a relatively wealthy economist whining because he’s afraid his taxes willl go up. All I meant.

                    4. Anyone who disagrees with me that taxes are never too high is unusually petty.

        3. Or, is it possible that now that you are in your forties you are less “hungry” and more likely to value relaxation? Ten years ago I used to work overnights for extra pay, frequently getting by on three hours sleep per night. Now, I wouldn’t do those overnights again if my life depended on it. I am on the wrong side of thirty to be sleep deprived.

          Not having to pay overtime taxes probably wouldn’t sweeten the deal for me all that much, to be honest.

    3. My wife makes well into six figures, so ALL my taxable income is taxed at the top marginal rate with no deductions.

      I calculated that the job I was working netted me about $10 to $15 a day after taxes and expenses.

      So I quit my job, and now do stuff around the house that saves money but isn’t taxable income.

      So, yeah, real-world consequences of extortionate tax rates.

      1. Does your wife have a sister with the same job?

  13. I calculated the numbers without the expiration of Bush tax credit:

    Assumptions:
    35% federal marginal rate
    0% death tax
    state and medicare stays same as mentioned above, as does the corporate taxes.

    $1000 becomes $578 in taxes.
    Grows to $1875.

    So the 3 scenaries:
    no taxes: $10000
    Bush taxes: $1875
    post-Bush: $1000

    81.25% vs 90% tax rate. Either way, explains why he turns down most of the offers.

  14. “$578 after taxes” is what it should say.

  15. Doesn’t anyone realize that the proposed increase is for individuals making $200,000 a year and couples making $250,000 a year?

    1. Nice marriage penalty going on there.

      1. And high earnings gays want this for what reason again?

        1. No shit. Now I’m full steam ahead on legalizing gay marriage.

        2. Speaking for myself, I’m against marriage. I just like the idea of legal equality.

  16. Greg has used this gag before, warning us not to vote for Obama in ’08. Furthermore, as Brad DeLong snidely points out, one reason why the federal debt is so high is the massive budget deficits that the Bush Administration ran up, which was when Greg was, well, one of Georgie Boy’s economic advisors. Maybe Greg should pay for his own mess, eh?

    Brad’s takedown is here:

    http://delong.typepad.com/sdj/…..times.html

    My own riff on Brad’s piece is here:

    http://avanneman.blogspot.com/…..idiot.html

    1. Gag? The math is correct.

      1. As Brad points out, as one of George W. Bush’s advisors, Greg watched as George Jr. gleefully ran up the federal debt by hundreds of billions of dollars for political purposes, leaving office with the country mired in two bloody, useless, expensive wars, not to mention the worst financial crisis in eighty years. If Greg thought any of this was a bad idea, he certainly kept his thoughts to himself.

        So we’re back in agreement, government spending via stimulus spending(what FDR lovers refer to as “a war”) is bad for the economy.

    2. DeLong’s “takedown” is anything but. He essentially faults Bush for not cutting spending, and says the spending is what has “willed” the current tax increases.

      All very convincing, assuming DeLong and his ilk would have supported such spending cuts. Surely his blog is replete with examples of his ideas for cutting the federal budget during the Bush years, right? RIGHT?

      The notion that Democrats would have reigned in Bush’s careless spending is simply laughable. In fact, Obama’s first two years put the matter to rest — he took Bush’s spending, added hundreds of billions more, and now wants to raise taxes while simultaneously increasing the deficit.

      Also keep in mind that Obama made clear during the election that his tax proposals were largely about “fairness,” not about closing the deficit. When confronted with the possibility that raising the cap gains tax would reduce federal revenue, Obama backed down not one inch. Taking more money from investors is a matter of principle for him. Raising revenues to fund the government is a secondary matter. In that sense, Bush’s spending willed not one penny of Obama’s tax increases. He wants to take the money no matter what, spend it, borrow trillions more, and spend that too.

      1. As best as I can glean from the progressive talking points about “But Bush increased spending too! (while drastically deregulating and cutting government to the bone… TO THE BONE I TELLS YA!) is that Bushitler, being the right-wing fanatical operative that he was, merely targeted the spending incorrectly. Ie, it’s not the spending, it’s where it’s spent that makes the difference.

    3. Shouldn’t you be at home writing your next Tarzan of the Apes book?

  17. HERE’S the bottom line: Without any taxes, accepting that editor’s assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000.

    I don’t see a problem.

    1. +9000

  18. Greg Mankiw needs to Go Galt.

    1. And by Go Galt I mean treat me like I was Dagny Taggart.

      God I love the strong cocks of men who are smarter than me in my anus.

  19. Jeez, what a dishonest analysis. It completely ignores the effect of price inflation on the value his heir will receive.

    Even with a benign, pollyannaish projection of 2% inflation per year, his pollyannaish 4% return his halved. This would leave his estate with $947, not $1700. After the 55% estate tax whack, his heirs would only get about $426 of current dollar purchasing power.

    Mankiw is an economist so he has no excuse for leaving out inflation.

    He also ignores the very strong possibility that the cap on the self-employment tax is going to be lifted. That would whack another 12% off.

    1. Inflation applies to both numbers (the without tax 10k and the with-tax 1k) so they are both reduced by the same factor.

      So the ratio between them is the same.

      1. Not quite the same because nominal “income” and “gains” that merely cover inflation are taxed at the same rate as real income and gains.

        1. True, I was applying the inflation post tax instead of pre-tax.

    2. oops, it should say “constant dollar purchasing power”

  20. The greatest mystery in economics is why so many people continue to ignore its most basic observations.

    Progressives are to free markets like the Pope was to Galileo.

    1. So, only 400years to wait for an apology?

  21. Greg Mankiw says, “AN important issue dividing the political parties is whether to raise taxes on those earning more than $250,000 a year…”

    ALREADY, taxes get raised from those earning more than $250,000 a year.

    The REAL ISSUE is whether or not to INCREASE the amount raised.

    Until persons get clear on concepts and until persons express such concepts properly using the power of English, they shall confuse others and worst of all, themselves.

  22. So that Coke I bought for $1 REALLY cost me $1000, because in 90 years’ time that’s what that dollar will be worth?

    Taxes have to be really high to create a disincentive for people to work. Like literally absurdly high. Mankiw’s article is not worth $1000 intrinsically. So he takes home $523 and gets to pay for civilization with the balance. Yes wouldn’t it be nice if we had civilization for free and we could invest all that money that goes to the treasury for ourselves. Unicorns would be nice too.

    If Mankiw turns down work because the fee isn’t high enough after taxes, then he’s in a position a lot of people would envy. Ask any normal person if they’d turn down $500 for writing nonsense about virtual money because it’s not $1000 and you’d be hard pressed to find anyone outside of a Harvard thought experiment who’d say yes.

    1. Yeah, you write nonsense about taxes being necessary for civilization and never see a dime from it! But wait, that also means you aren’t paying taxes either. This is a problem.

      How do we allow people to benefit from civilization if they pay no taxes? If I chose to not be paid then I am destroying civilization!?

      And I get food stamps too!

    2. Re: Tony,

      So that Coke I bought for $1 REALLY cost me $1000, because in 90 years’ time that’s what that dollar will be worth?

      Only if you invest that dollar. Minus inflation.

      Taxes have to be really high to create a disincentive for people to work.

      Hence – Europe.

      Like literally absurdly high.

      Yes… Like, how high, Tony?

      By the way, only an individual knows his incentives, you cannot presume to know his, and he cannot presume to know yours.

      So he takes home $523 and gets to pay for civilization with the balance.

      Non sequitur. Also, it is false – one does not pay for “civilization.” You confuse “civilization” with “infrastructure.”

    3. Ask any normal person if they’d turn down $500 for writing nonsense about virtual money because it’s not $1000 and you’d be hard pressed to find anyone outside of a Harvard thought experiment who’d say yes.

      He’s got a point. Krugman certainly won’t shut up.

    4. Re: Tony,

      Yes wouldn’t it be nice if we had civilization for free and we could invest all that money that goes to the treasury for ourselves.

      You mean people would not buy services, even from private companies? Or are you seriously arguing that only government provides civilizing goods? I will have to take that in mind next time I buy a bar of soap…

      Idiot.

    5. Taxes are the difference between whether or not it makes sense for my wife to hire a nanny so she can take on more consulting work. And it CERTAINLY determines whether or not she can command a high enough rate to cover the taxes, the nanny expenses, and then leave enough left over to make it more attractive to work than to cut expenses.

      She has to earn twice as much as the nanny, JUST TO BREAK EVEN, and what’s the point of that?

      She has to earn 4x to make it worth to hassle.

      Recently, the math has said work less, cut back on the nanny’s hours.

      This is a very concrete example of higher taxes to “soak” the rich coming back to bite the poor.

      1. What business does a person who only makes twice as much as a nanny have hiring a nanny?

        1. Re: Tony,

          What business does a person who only makes twice as much as a nanny have hiring a nanny?

          They’re great help.

          1. Yes but if your nanny’s income is x and your income is only 2x then you can’t afford a nanny.

            1. but with the taxes I am now 3-4% further away from hiring that “nanny”

            2. Re: Tony,

              Yes but if your nanny’s income is x and your income is only 2x then you can’t afford a nanny.

              That is what bubba is saying: His wife only breaks even if she makes only 2X what the nanny makes. She therefore cannot afford her. Instead, without taxation, she can afford a nanny. That’s the point – taxation increases the unemployment rate among nannies.

              1. But without taxes you wouldn’t be able to afford a nanny anyway because you’d spend all your help money on armed bodyguards.

                1. Re: Tony,

                  But without taxes you wouldn’t be able to afford a nanny anyway because you’d spend all your help money on armed bodyguards.

                  You mean just like the president has to spend money on armed bodyguards???

                  Because if there’s ONE thing that’s true about the police, is that they’re NOT omnipresent, nor are they superheroes. But without taxes, I would have more money to spend on a Smith & Wesson 40 mil semi, plus ammo. So, really, you hate the poor because you don’t allow them to arm themselves, through taxation.

                  1. I thought the poor don’t pay taxes.

                    1. Re: Tony,

                      I thought the poor don’t pay taxes.

                      Yes, I though YOU though that, too. But they DO pay taxes: Gas, sales, tariffs, SS, Medicare/Medicaid…

    6. Tony, are you actually claiming that there was no civilization before there were income taxes?

      1. Not one to write home about.

  23. If the smart, rich people keep working hard, there will be less work for the poor, dumb people.

    Right?

    1. Yeah high taxes just make sure more jobs go to the lower and middle class because the greedy fat cats are too lazy and selfish to keep paying taxes. So by being selfish they are selfless and that is how taxes are actually miracles.

  24. I must be missing a gene or something, because I don’t give a shit whether Mankiw or anyone else takes on more gigs, whether it’s because of taxes or any other reason.

    Is there a reason why I should care whether someone else — especially an economist — decides to work less?

    1. That’s the $100,000.00 question isn’t it…. why should I give a fig what Mankiw thinks?

    2. I just want him to rape me, I don’t want to hear any grown-up talk-talk.

  25. The Laffer Curve is so simple that even a politician might be able to explain it. (Big might.) For any out there looking for the sound-byte to help you, how about: “You can either have wealth trickle down or poverty trickle up. Your choice.”
    Helping your case is how economists have recently discovered poverty is, in fact, trickling up? Imagine that!

    1. Those are not only not the only choices, neither one is a real choice. Poverty is trickling up is another way of saying wealth is trickling up, at which point it never tends to trickle back down again. Not in times of growth and certainly not in times of weakness.

      1. Yes, the standard of living for the world’s poor never increases – because Tony says so!

        1. I find it amusing that the poor of today live longer and are generally fatter than the poor of yesterday. Sure, Tony will cite the evils of Capitalism for the high sodium / high fat diets cheaply available to Americans of any class, secretly prefering to bring back the classic poverty of constant starvation (granted some of this could be due to the distortions created by subisdies, then again, subsidies could have infused an unhealthy amount of artificially cheap additives into our food). Africa-style poverty if you will. To some extent, eating awful fatty food is precisely what you should do if you are living paycheck to paycheck since any bump in the road might bump eating 3 times a day down on your list of priorities.

          1. Ok as long as we’re not blaming obesity among the poor on their lazy entitlement attitudes.

            1. Nope. Just saying that the poor is this country are the richest poor in the history of the human race. Perhaps this situation is not sustainable for a myriad of reasons, but that is not the point. The point is, the homeless guy down at the metro station begging for money is twice my weight and 3 inches shorter than I am.

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