Seriously. I know I am overdoing it on the op-eds, but even without “fisking” the article it is another mish-mash of wishful thinking, half-truth, and plain inconsistency. The only thing I can conclude from the article is thatÂ N. Gregory Mankiw cannot be bothered to roll out of bed for less than $1,000. And that’s in a world with no taxes – must be nice to live there, or in Cambridge.
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.
That’s actually a lot of miracles. Farther on, he concludes that because of tax breaks expiring his children would only receive $1,700-odd dollars before being subjected to estate tax — one affecting people leaving a few million dollars AND not availing themselves of a huge number of other ways of transferring property. What happens if tax policies (*cough* cuts *cough*) remain in place? He leaves $2,000 after 30 years…
<rant>Â Really?! Really?! We have this discussion from an Economics professor at Harvard about something that has nominal value of $300 and a present value of $30 (with 8% return he expects) or $90 (with 4% return) according to this present value calculator </rant>
Author concludes that this incredibly high marginal tax rate makes him unwilling to work and produce, presumably, similarly weak articles. Fine by me. Is not the whole point of being very well-off is to make this kind of decisions? Would he still work if he got paid more? Since, as a professor he understands that his tax *rate* would remain the same, surely he would not work for $10,000 a day, right?
Luckily for the rest of us, the few tax payers not in danger of being hit with the estate tax, or saving enough money to put our grandchildren through college – we can take the writing job, or the teaching one – if anyone would offer us one.
ps. I know this is not based on a current article, but I am clearing out my draft/desk drawer. Sorry.