Sunday, October 10, 2010

Mankiw and Taxes, My Touching Faith in the Professor

Greg Mankiw has a column in the NYTimes on his marginal tax rate, as it stands, and if the Bush tax cuts for the over $250K bracket aren't extended. He makes a fairly convincing case that increasing his marginal tax rate would decrease his incentive for added production.  Apparently, in his case, he'd be less apt to accept additional speaking engagements.

But I've some questions: when he's on the road speaking, what is it he's not doing?
  • Presumably he's not at Harvard mentoring his graduate students or teaching his undergrads.  (Maybe he will have fewer guest lecturers in Econ 101 and more of the real Mankiw?) Maybe he cuts his office hours?
  • Or maybe he's not doing economic research, writing the next great paper which is going to win him a Nobel prize?
  • Or maybe he's not home with his family, investing in their social capital and his happiness? (Granted, none of the activities he's not doing would show up in the GDP, but Professor Mankiw is still a sentient human being and he's probably contributing to the good of the society wherever he is and whatever he's doing.
On a broader scale, assuming we need the money for the government, isn't the issue whether it's better to reduce the incentives for someone such as Professor Mankiw, or for the struggling graduate student or the assistant professor without tenure? To some extent it would seem increasing the rates on higher levels of income is age-biased; it is more likely to hit the older, better established person. I'd assume, just as the most jobs are created by start-up businesses, most ideas are created by the young. That would lead me to support increasing the rates on the high brackets, if that's the only choice I'm given.

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