Greg Mankiw Proves Raising Taxes Is a Win Win

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Oh sure, in this NYT op-ed, Greg Mankiw shamelessly fiddles with numbers to try to show that raising taxes on rich people like him will be bad for the economy. But you don’t even have to point out the obvious flaws in his math [Update: Kevin Drum shows some of those flaws here] to read this op-ed as an unrestrained argument in favor of raising taxes on the rich.

For starters, Mankiw claims he’ll stop writing NYT op-eds if his federal taxes go up.

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.

[snip]

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?

So if we raise taxes, less of this kind of transparent bullshit with numbers will appear on the NYT op-ed page.

WIN!

Moreover, if Mankiw stops writing these crappy op-eds, it’ll open up an opportunity for someone else to write op-eds for the NYT. That person, according to Mankiw’s logic, would have to be someone less wealthy than him (because Mankiw shows no sane rich person would write an NYT op-ed for only $523 of savings). And since that person is by definition not rich, she will probably spend more of the $1000 the NYT would pay her right away, rather than pass it on to her kids as Mankiw says he will do with his pay for writing this NYT op-ed.

WIN!

I’ve seen no more compelling, succinct argument for why we should raise taxes. Not only will it result in more money flowing through the economy immediately, but it’ll save us from having to read the ramblings of rich people like Mankiw, David Broder, and Tom Friedman.

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  1. allan says:

    …it’ll save us from having to read the ramblings of rich people like Mankiw, David Broder, and Tom Friedman.

    Why do I suspect that Broder would give it away for free?

  2. ScrewBush says:

    What an idiot. I’m shocked at what the NYT will print.
    Anyway, it’s difficult to craft analogies for the tax system because it’s graduated by brackets. If Bush-Cuts expire, then for the first quarter million PER YEAR nothing changes. Ouch! Please stuff that much money into my wallet and let me complain… Please!

    Putting aside the fact that if these rich folks were going to create lots of jobs with all this untaxed money those jobs would be in China, let’s go with the analogy that my business is a magic box. Now, every time I put a $1 into this magic box, I get $2 coming out. So, being the brilliant business guy that I am, I begin to stuff this magic box with $1 notes, and fantastically twice as much money keeps pouring out like a slot machine gone wild. I’m happy!

    Now let’s add some horrible Socialist, Commie, Kenyan styled Colonial like taxes which are obviously meant to only target older white men like myself. Now I put a $1 into my magic box, but because of taxes, only $1.70 comes out. OMG, WTF!

    Big question here, if you could put $1 into a magic box and $1.70 would come out, how much money would you stuff into the magic box? (Cue Jeopardy music….) That’s right, as much money as you could because YOU’RE STILL MAKING MONEY !!!!!

    Remember even in the Eisenhower 90% top tax bracket years, business in America continued to exist, function, and even profit. How could that be? Because for every dollar they put in they got more than a dollar coming out. So stop your damn whining.

    • emptywheel says:

      Yeah, but that assumes you’re investing in companies that make something. In this day of finance, that’s not true anymore. Granted, it usually means the rich people put in $1 and get out $8 (while the little people lose big). But still.

  3. harpie says:

    LOL! It would be a “WIN!” all around. Thanks for the laugh…I really needed that.

    PS: Typo?:

    But you don’t even have to point out the obvious flaws in his math to read this op-ed as an unrestrained argument in favor of raising taxes on the rich.

  4. edmigper says:

    What a load of crap. He says his marginal tax rate ends up being 90%, as if that’s even possible. Where in the world does he find the rest of the ~55% he’s taxed? The top marginal tax rate is under 35%. An economist who doesn’t know how to do his taxes shouldn’t be allowed anywhere near a NYT op-ed.

    • Teddy Partridge says:

      Since he’s talking about turning it over to his kids, I guess maybe he’s planning to die in a non-2010 year, so it will be subject to confiscatory estate taxes?

      Hard to say, his argument is so impenetrably idiotic.

  5. IntelVet says:

    I have yet to hear the argument, but, I wonder how the public would take the information that the Bush tax cuts would be continued on the first $200,000 single, $250,000 not-single AGI for everyone, anything above that would revert to the tax rate of the boom years of the 1990’s?

    • cinnamonape says:

      Yes, it’s only on the income that’s above the first $250K…so there is absolutely no disincentive to “make more money”. And there are a whole host of programs in which actual job-creating enterprises are given tax breaks…money put back into job creation within a business (re-investment) isn’t considered income at all. Of course, if it engenders even more profit, which is then taken out of the business, then it is considered income.

      But that isn’t “job creation” any more than my income being taxed despite the fact that I spend it on groceries, housing, clothing, etc. The wealthy tend to buy items that are based on items created hundreds of years ago, and line the pockets of “brokers” and dealers. There is very little job creation there.

  6. allan says:

    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.

    Mankiw should be more concerned about the executives and highly compensated employees who are looting (in the academically rigorous Akerlof and Romer sense of the word) the firms in which he invests than he is in the corporate income tax rate (which effectively is far less than 35%).
    I’m sure Larry could tell him all about it.

  8. chrisc says:

    one of the things I remember about the Clinton era is that the economy seemed much stronger. Some people even were paid a bounty for bringing in potential job applicants. I remember watching a news segment about a formerly middle class mother who sent her kids to a shrink so they could deal with being millionaires. Good times, no?

    So after the Bush tax cuts, the economy has been in the toilet. I realize that there are more factors to the economy than tax cuts, but if they were going to boost the economy and produce jobs, should’t that have happened by now? How does anyone get away with saying that the tax cuts for the rich produce jobs when we have empirical evidence of the opposite?

    • IntelVet says:

      Why is it, when reading these failing grade essays, I envision a five year old jumping up and down for attention.

  11. prostratedragon says:

    Though others have also weighed in, I’d say that between DeLong and EW alone, Mankiw is surrounded. (Kind of a minimal swamping set or basic rhetorical vectors sort of thing.)

  15. ThingsComeUndone says:

    Mankiw assumes that without the fame of his articles in the Times constantly being printed his demand as a speaker will never go down?
    His value to business groups and other people who pay his speaking fees to influence public opinion their way won’t go down if he stops writing?
    Mankiw seems to think his speaking fees are not a quid pro quo that he really is a Self Made Man?
    Fine dare him to give up writing and lets see where he is in 5 years.

  16. ThingsComeUndone says:

    I assume an editor saw his tax returns and backs up his facts/s? Wait its the Times was Judy Miller’s editor working that day?

  17. coach777b says:

    How or why did the NYT allow this whining asshole to take up space on its Op-Ed page? A 90% tax rate! You got to be kidding me. Either he’s a lousy economist or a lousy mathematician. So this is the chump change that he earns on the side and turns over to his kids. They must be living large while families are losing their homes, their jobs and their health. This Op-Ed piece should be posted as a prime example these “wealthy elite” should lose the Bush give away tax cuts.

  18. bgrothus says:

    “I don’t get out of bed for less than $10,000.” (Top model) I’m crying an ocean for this sorry excuse of a person who seriously overrates himself. “I can’t ‘do lunch’ for $10,000, it just does not pay.” Oceans.

  19. peterjkraus says:

    Mankiw’s article blew my mind — not only because of his bullshit math (90%? Gimme a break!) but for its arrogance. I make ten grand for a couple of hours’ work, but because my tax rate is ninety percent (how’s Sweden in Fall, Mankiw? Cold?) I only make a thousand bucks, and for that kind of chickenfeed, I will not work,

    What a prick. And what a prick the NYT editor is who bought this piece of shit.

  21. gordonot says:

    That’s fuckin’ hilarious. He’s actually so convinced he’s God’s gift to the earth that he thinks we’ll all cower in fear at his threatening to not write shitty oped for the shitty NYT? Ha ha ha (repeat ha ad infinitum.)

  22. progress says:

    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?

    How much income he is making and he needs to write and logically explain what he means by 90 percent with clear break-down if he wants his readers to agree with conclusion. I saw purposeful obfuscation and jumping to pre-determined conclusion of 90% taxation without any logical reasoning in the article.

    BTW In my opinion, this is a totally false statement similar to fake WMD in Iraq articles I saw in major newspapers. How can NY Times approve this article to be published because this can be so easily disproved if provides a little bit of more his personal income facts with public information of taxation.