Sunday, October 10, 2010

DeLong Decks Mankiw with a Sharp Jab He Never Saw Coming

Greg Mankiw's column in today's NY Times (here) claims the Obama Administration's plan to raise taxes on those earning over $250,000 per year will cause him to work less. My first reaction to the column was to scoff at the notion that, after receiving an offer of temporary employment (e.g., to give a lecture at another school for a $1,000 honorarium, Mankiw would, in true homo economicus fashion, calculate to the the last penny not just the income tax consequences of the deal, but even the estate tax consequences.

Then I read this assessment by Brad DeLong, which explains why Mankiw's analysis is both mistargeted (at the Obama Administration) and morally obtuse. DeLong also offers an empirical test of Mankiw's analysis on which it would be irrational for Mankiw to continue writing a regular column for the New York Times if the Obama tax plan is implemented.

A masterful take-down by DeLong. We'll see if Mankiw manages to pick himself up off the mat to respond.

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