Recent Posts
(Note: Page numbers referenced in posts prior to June 1, 2011 refer to 5th edition)
February 23
Dynamic Scoring Redux
Mankiw provides a link to his paper on the extent to which tax cuts are self-financing. The possibility arises because if a tax cut creates growth, then the tax base grows as the tax rate falls.
Textbook References:
Pages 7-9 “Principle 4: People Respond to Incentives”Pages 165-166 “The Laffer Curve and Supply-Side Economics”
June 22
Preaching to the Choir
Mankiw agrees with Paul Krugman that across-the-board cuts in tax rates will not typically increase tax revenue. But Mankiw takes issue with Krugman's evidence.
Textbook References:
Pages 34-35 “Why Economists Disagree”Pages 163-166 “Deadweight Loss and Tax Revenue as Taxes Vary”
February 2
Donald Marron on Tax Reform
Donald Marron testifies before Congress about the tax code. He argues that reducing tax preferences ("credits, deductions, deferrals, exclusions, exemptions, and preferential rates") could reduce tax rates and improve fairness.
Textbook References:
Pages 167-171 “Deadweight Loss and Tax Revenue as Taxes Vary”Chapter 12 “The Design of the Tax System”
December 7
The Tax Deal
Mankiw comments on the tax deal between President Obama and Congressional Republicans. He is generally pleased, but notes a peculiarity of the cut in the payroll tax.
Textbook References:
Page 127 “Can Congress Distribute The Burden Of A Payroll Tax?”Pages 166-167 “The Deadweight Loss Debate”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
November 16
Hubbard on the Bowles-Simpson Tax Plan
Glenn Hubbard likes the idea of broadening the tax base so as to reduce tax rates.
Textbook References:
Page 6 “Principle 3: Rational People Think at the Margin”Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 160-164 “The Deadweight Loss of Taxation”
Pages 246-248 “The Fiscal Challenge Ahead”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 842-843 “Dealing with Deficits”
November 7
Thaler on the Estate Tax
Richard Thaler argues in favor of retaining the estate tax. Greg Mankiw makes the opposite case.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 160-164 “The Deadweight Loss of Taxation”
Pages 256-257 “Tax Incidence and Tax Equity”
October 29
A Rolling Stone gathers no taxes
The Rolling Stones make decisions on where to work and live based on the tax laws.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 167-171 “Deadweight Loss And Tax Revenue As Taxes Vary”
October 18
Hear Me Squawk
Mankiw discusses a variety of issues including marginal tax rates, long-term deficits, and ways to stimulate the economy.
Textbook References:
Page 6 “Principle 3: Rational People Think at the Margin”Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 160-164 “The Deadweight Loss of Taxation”
Pages 246-248 “The Fiscal Challenge Ahead”
Page 399 “The Trade-off Between Work and Leisure”
Pages 589-593 “Policy 3: Government Budget Deficits and Surpluses”
Pages 749-751 “Why the Aggregate-Demand Curve Might Shift”
Page 750 “The 2008 Fiscal Stimulus”
Pages 778-787 “How Monetary Policy Influences Aggregate Demand”
Pages 787-793 “How Fiscal Policy Influences Aggregate Demand”
Pages 793-797 “Using Policy To Stabilize The Economy”
Pages 842-843 “Dealing with Deficits”
October 12
Response to Queries
Mankiw responds to questions about his New York Times article that was posted on his blog on October 10.
Textbook References:
Page 6 “Principle 3: Rational People Think at the Margin”Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 160-164 “The Deadweight Loss of Taxation”
Page 399 “The Trade-off Between Work and Leisure”
October 10
My Marginal Tax Rate
Mankiw explains how the marginal tax rate affects his decisions about how much to work.
Textbook References:
Page 6 “Principle 3: Rational People Think at the Margin”Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 160-164 “The Deadweight Loss of Taxation”
Page 399 “The Trade-off Between Work and Leisure”
September 17
Glaeser on Goolsbee
Edward Glaeser discusses the new chair of the Council of Economic Advisers.
Textbook References:
Pages 30-33 “The Economist As Policy Adviser”
Pages 160-164 “The Deadweight Loss of Taxation”
Pages 164-167 “The Determinants Of The Deadweight Loss”
Pages 369-370 “How the Size of an Oligopoly Affects the Market Outcome”
September 15
How much would the President raise the top rate?
Alan Viard argues that while the marginal tax rate on top earners will rise to 39.6 percent, the elimination of itemized deductions and increases in the Medicare tax will make the effective rate 44.6 percent by 2013.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 164-167 “The Determinants Of The Deadweight Loss”
August 10
Where does the Laffer curve bend?
Ezra Klein asked a variety of economists and policy wonks what tax rate maximized government tax revenue. He received a wide range of responses.
Textbook References:
Pages 169-171 “The Laffer Curve And Supply-Side Economics”May 1
Ambivalence
Mankiw explains the pros and cons of a value-added tax (VAT).
Textbook References:
Pages 160-164 “The Deadweight Loss of Taxation”Page 251 “Should Income or Consumption Be Taxed?”
Pages 254-255 “The Ability-to-Pay Principle”
April 14
A Guest Post From John Galt
Mankiw suggests that the marginal tax rates on income have a significant effect on behavior.
Textbook References:
Pages 6 “Principle 3: Rational People Think at the Margin”Pages 7-8 “Principle 4: People Respond to Incentives”
Pages 169-171 “The Laffer Curve And Supply-Side Economics”
Page 795 “Keynesians in the White House”
April 10
The Enormity of the Fiscal Gap
The Tax Policy Center argues that income taxes must rise by 40 per cent just to reduce the deficit to 3 per cent of GDP.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 160-164 “The Deadweight Loss of Taxation”
Pages 246-248 “The Fiscal Challenge Ahead”
Pages 589-593 “Policy 3: Government Budget Deficits”
Pages 838-841 “Should the Government Balance Its Budget?”
March 20
A Warning About CBO Scoring
Mankiw warns that the CBO's assessment of the impact of the healthcare bill assumes that the growth rate of GDP will be unaffected. Mankiw argues that the higher marginal tax rates associated with the bill will likely reduce the growth rate of GDP.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 160-164 “The Deadweight Loss of Taxation”
January 31
Slow Growth and Rising Debt
Carmen Reinhart and Kenneth Rogoff warn that rising public debt may lead to default, higher taxes, or financial repression. All harm growth.
Textbook References:
Pages 7-8 “Principle 4: People Respond to Incentives”Pages 160-164 “The Deadweight Loss of Taxation”
Pages 246-248 “The Fiscal Challenge Ahead”
Pages 589-593 “Policy 3: Government Budget Deficits”