re: #41 garhighway

It is indeed a sad thing for the world that Greg Mankiw will be speaking less.

But humor those of us who like historical context: how does this square with real-world behavior during the Clinton years? Did economist-for-hire speaking engagements go unfilled then?

And for you deficit hawks out there: how much deficit are you willing to suffer so Greg can get back on the road?

You completely miss the point. If you raise tax RATES, at some point the net harm to the economy results in lower tax TAKE. Government is a business of sorts. A landlord cannot simply increase his income by raising rents. People will find a way to live somewhere else if rents are set too high. It’s the same with taxes. People will find a legal way around those higher tax rates: earn less.

There are pleasures in life that cost a lot, and others that cost but little. Money has its uses, but earning the money takes time. The tradeoff between money and leisure breaks more toward leisure the higher tax rates go.

Raising the system’s marginal rates on the rich from 28% to 30% will bring more revenue, and will not much harm the economy. Raising them from 30% to 32% will raise less additional revenue and will do more collateral damage. Raising marginal rates, (and we have to take ALL taxes into account, not just the rate from one particular tax) from 60% to 62% will probably result in very little extra revenue, and a lot more collateral damage. Raising marginal rates from 70% to 72% will probably result in overall LESS revenue, making both the economy, and the deficit, worse.