Mankiw says he's in it for the money.
At least he's frank.
Well, that's a little unfair, to be sure (he was just doing a fashionable, Joe-the-Economist example), ...
but ... $7,500 at the margin for a single income earner in the $250,000 range is not ... "incentive". It's "gravy". (Estimates from the Obama plan's cutoff of $250L and 36%->39% effective marginal rate shift).
For "incentive", one could argue that most of those people in that income range are trying to play for a "bonus" of some kind, half an order of magnitude larger - a book advance, a promotion, a pay-off from a risky investment, a deal fee, a new small-business contract, a bumper harvest (or sell through), a large billable-client, etc..
Anyway, I wish he'd answer this question, instead: what do you do for tax policy when one tries certain fiscal policies, like cutting tax rates, yet ends up after eight years with a sizable deficit?
What does economic theory say about "catch-up", if you will? A one-time tax on wealth (i.e., the flows that should have been taxed during prior periods to create a reasonable fiscal balance?)
Monday, October 27, 2008
In it for the money?
