Last week, I was surprised by an unusually disingenuous article by Greg Mankiw in the Sunday NYT column – “I Can Afford Higher Taxes. But They’ll Make Me Work Less.”
As I read it, I was struck how disconnected it was from the real world. I have been meaning to get to it, but the Fraudclosure issue pushed everything else aside.
I suggest you read Professor Mankiw’s piece, then come back here to consider the following questions..
TenMany Questions for Greg Mankiw
1. Taxes were higher in 1990s then they were in the 2000s. Yet you left the lucrative private sector for a low paying job in the public sector. Why?
2. Which decade did you work more — the 1980s, 1990s, or 2000s ? How much of your work decisions were driven by marginal tax rates?
3. The article you wrote claimed you regularly turn down most job offers.
a. Do incentives not matter to you?
b. Are you a rational economic participant?
c. Are you motivated by maximizing income? Do other non financial factors weight significantly in your thought process?
4. You have a variety of income streams – speeches, textbooks, articles, etc. – yet you discuss tax consequences as if you were paying ordinary payroll income tax. Are you unfamiliar with the benefits of incorporation? Do you have an accountant or an attorney advising you on these matters?
5. You teach at Harvard and live in “Taxachusetts.” If state taxes are so important, have you considered teaching at Yale, and living in much lower state tax land of Connecticut?
6. You mentioned a stock that will generate 8% annual returns over the next 30 years. What stock is it?
7. You also stated the aforementioned mythical company pays 35% income tax. Is this company unlike most large S&P500 firms that generate more than half of their net profits overseas, then leave the monies there, giving them an effective tax rate around 10% ?
8. Are you unfamiliar with the benefits of 401ks and KEOGH plans that allow you to invest your pre-tax income? Do you know about matching contributions to retirement plans?
9. Why did you claim your heirs will have to pay estate taxes — Is your estate going to be greater than $7 million dollars? If it is > $7m, are you familiar with term life insurance?
10. You were Chairman of the CEA in George Bush’ White House. His administration passed the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. These tax cuts were unfunded by offsetting spending cuts. Indeed, his administration ran up spending dramatically.
Since you seem to be fond of making projections 30 years into the future, my final questions for you are: What will the total costs of those tax cuts be, projected out 30 years be? How about the costs of those spending increases? Indeed, what will be the total cost of that White House projected 3 decades into the future?
And, what will the final bill for these be for your children? How might THAT affect their decisions?
Thank you for your answers to these questions.
And if you need a good accountant, insurance man and lawyer, let me know — I can recommend quite a few.
I Can Afford Higher Taxes. But They’ll Make Me Work Less
N. GREGORY MANKIW
NYT October 9, 2010