I just returned from watching the Blumenthal debate. I noted in a previous post that I don’t like watching debates. They are stomach churning affairs, particularly when your candidate doesn’t come out with the answers that seem so obvious to you. Another reason is that the questioners are always (well, almost always) press people of very little brain, particularly those hired to sit in front of a camera and talk, such as Mark Davis, who asked Blumenthal a question about a column by Greg Mankiw that was in the New York Times over the weekend. The question was (I can’t quote it) to the effect that a Harvard Professor said that he wasn’t going to work so hard if the Bush tax cuts aren’t extended, so how can you justify saying you want to tax this poor guy?
Dean referred to Mankiw as a Harvard Professor. Blumenthal is a busy guy, so probably hadn’t read the column, didn’t realize it was Mankiw Davis was talking about, and hadn’t read the torrents of criticism the column has elicited. Mankiw’s basic point was that rich guys like him would think twice about working more if they had to pay the same tax rate as they did under Clinton (though there’s no evidence he wasn’t working then), because, well, I’ll lift a quote, with summary, from Kevin Drum:
[Explanation of how $1,000 in income from a writing assignment grows to $10,000 over thirty years without taxes, but only to $1,700 with Obama-level taxes.]
Then, when my children inherit the money, the estate tax will kick in. The marginal estate tax rate is scheduled to go as high as 55 percent next year, but Congress may reduce it a bit. Most likely, when that $1,700 enters my estate, my kids will get, at most, $1,000 of it….By contrast, without the tax increases advocated by the Obama administration, the numbers would look quite different. I would face a lower income tax rate, a lower Medicare tax rate, and no deduction phaseout or estate tax. Taking that writing assignment would yield my kids about $2,000. I would have twice the incentive to keep working.
And I’ll also lift Drum’s observations:
Do you see the card he palmed? Basically, the effect of letting the Bush cuts expire is so tiny that the only way to make it noticeable is to compound it over 30 years, which reduces the eventual payout of his writing assignment from $2,000 to $1,700. (And even that’s probably overstated, since it assumes Mankiw pays all his taxes at their full statutory rate, which virtually no one does.) The rest of the reduction down to $1,000 comes solely from the estate tax. But even on the heroic assumption that you should take this year’s zero rate as the baseline for comparison, the estate tax has an exemption of several million dollars. Unless Mankiw leaves his kids a helluva lot more than they need for a down payment on a house, they won’t pay a dime of estate tax.
And of course, we can’t forget a few points, made here by Brad Delong:
First, start with the fact that tax on Greg’s current writing earnings because he wants to leave more to his children in thirty years will be higher than today’s current Bush-era tax rates. But they will not be higher because of anything Barack Obama has done or failed to do. They will be higher for three reasons. First, George W. Bush and his advisors–of whom Greg Mankiw was one–failed to find any spending offsets in order to pay for the temporary Bush reductions in tax rates. Second, George W. Bush and his advisors–of whom Greg Mankiw was one–enacted a very large long-term spending increase without figuring out any way to pay for it: Medicare Part D. Third, George W. Bush and his advisors–of whom Greg Mankiw was one–enacted a second very large spending increase when they responded to Al Qaeda by greatly increasing the size of a conventional military which is of not much use in our current struggle, and also did so without figuring out any way to pay for it.
Now, it’s probably asking too much to expect Mark Davis to educate himself on any of this. He probably knew that Mankiw was a Bushie, and therefore suspect, but he probably couldn’t be bothered to do any basic research to find out if Mankiw’s argument made much sense. He likely couldn’t resist the opportunity to ask a question with a Harvard pedigree to which it would be impossible for Blumenthal to respond unless, in the middle of a tough campaign, he had taken the time to read the column, read the rebuttals, and absorb them well enough to be able to rebut Mankiw point by point, which would, of course, have taken far more than his allotted time. All in all, a truly stupid and unfair question. I should point out, by the way, that Davis also absolved Linda from having suggested that she would consider lowering the minimum wage when, in fact, that is the only way one can interpret her words, if one understands the English language.
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