Over at New York, Jonathan Chait points me over to the New York Times, where Harvard big-shot Gregory Mankiw is holding forth on the wonders of Robert Downy, Jr., noting that Bob’s latest performance as “Iron Man” was so abfab that the $50 mil Downy got up front for the film doesn’t upset people—“ when I talk to people about it, most are not appalled by his income. Why?”
As a supposed social scientist, Greg might be expected to have a better grasp of the concept “representative sample,” but never mind, never mind, because the conclusions Greg is going to draw from his exhaustive and scrupulously conducted little poll have nothing to do with his results in the first place.
According to Greg, his “research” proves that folks—at least the folks a Harvard professor is likely to encounter at cocktail hour—feel that all this “inequality” jive that we’re hearing from President Obama is just a lot of jive. Folks who earn the big bucks deserve the big bucks, so lighten up!
According to Greg, this is just as true of corporate CEOs and Wall Street wizards as it is of entertainers. So these folks aren’t doing anything wrong. In fact, they’re doing everything right! And, anyway, they already pay their “fair share” of taxes! Look at the facts! The top one tenth of one percent—those earning $2,7 million and up—paid 33.8 percent of their income in federal taxes. Look at the regular folks—those in the “middle fifth.” They only paid “just 12.4 percent.” Lucky duckys! And, for sure, “examples of the tax-dodging wealthy are not at all the norm.”
Well, for sure, Greg just ignores the 25 percent of the “super rich” whose income derives entirely from inherited wealth, who “deserve” to be rich because they had the right parents. Greg also neglects to mention that the average income (after tax) of the “middle fifth” is $51,832, as well as not mentioning that the average income, not the minimum income, of his top one-thousandth, is $5,127,488 (again, after tax), so that the big-shots are taking home, yes, one hundred times as much as the middle shots, so the fact that their tax rate is triple the middle rate doesn’t bother me all that much.
As for “tax-dodging,” I guess Greg means “breaking the law.” It’s not a tax-dodge to get most of your income from capital gains rather than a salary, but it does mean that you won’t pay much tax. And we have the recent example of Mitt Romney, in the top one-ten thousandth, more or less, paying a rate comparable to the “lucky middle.” And of course there are regressive sales taxes, state taxes, and local taxes, which bite the middle harder than the rich. Oh, and it would be nice to have, you know, $5 million in discretionary income, rather than about $5,000.
You’ll remember that Greg was head of President Bush’s council of economic advisors, who helped whoop through the Bush-era tax cuts, which did precisely bupkus for the U.S. economy, but did make life sweeter for the Robert Downy, Jrs., and the N. Gregory Mankiws, of the world. So when Greg tells you to ignore all this inequality jive, get a firm grip on the old salt cellar.
Afterwords
Several eons ago—shortly before the 2008 election—Greg “warned” us that if we elected Obama, he might raise taxes to the extent that Greg might feel like writing fewer articles. Clearly, that hasn’t happened. And, just as clearly, that’s the best argument ever for raising taxes. Now! And high!
