Mankiw and Colbert
For some smiles and econ also, the following links are fun.
It all began with Harvard’s N. Gregory Mankiw’s NY Times op-ed column on higher tax rates. Explaining, he said that $1000 wisely invested, with no taxes, became $10,000 in 30 years. By contrast, letting the Bush tax cuts expire slices that $1000 to a $523 check which other taxes further deplete. The result? In 30 years, the amount grows to $1700. Knowing that he would have considerably less to save for his children could result, he said, in writing fewer columns.
Smiling at the exchange, we can also consider the debate about tax rates and see how Dr. Mankiw’s students used demand and supply to present the impact of Colbert on their teacher.
The Economic Lesson
In Teaching Company Lecture 3, from “History of the U.S. Economy in the 20th Century,” Professor Timothy Taylor describes a roller coaster of tax rates. Starting from a top 77% rate after World World I, rates then descended more than 40%. Taylor tells us that while tax rates fluctuated considerably, tax revenue remained remarkably constant then and at other times during the 20th century.