I know this has received comment here at Angry Bear a few weeks back (sorry – I’m in too much of a hurry to find the link right now) but a post by Greg Mankiw looking at his own incentive structure under the proposed Obama and McCain tax systems sticks in my craw. He writes:
That is, Obama’s proposed tax hikes reduce my incentive to work by 62 percent compared to the McCain plan and by 93 percent compared to the no-tax scenario. In a sense, putting the various pieces of the tax system together, I would be facing a marginal tax rate of 93 percent.
The bottom line: If you are one of those people out there trying to induce me to do some work for you, there is a good chance I will turn you down. And the likelihood will go up after President Obama puts his tax plan in place. I expect to spend more time playing with my kids. They will be poorer when they grow up, but perhaps they will have a few more happy memories.
Wonderful. Someone should inform him that the employment to population ratio is lower now than it was when the President he advised took office, lower than when that President began following policies Mr. Mankiw promoted and supported, and lower than it was than when he officially became his President’s chief economic advisor. Most of these extra unemployed, not to mention the extra underemployed folks, are not there because they chose to spend more time with their kids. Their kids will grow up poorer, and with memories of seeing their parents worry about paying the bills and putting food on the table. See, very, very little of what Mankiw’s President and Mankiw said, when it comes to the economy, came to pass. Their policies have not worked. And now Mankiw tells us about his own work incentives? Its a pity they can’t be applied retroactively – maybe millions of people didn’t have to be made poorer if folks like Mankiw and his President could have been induced to leave the rest of us alone.