As part of his master plan to “spread the wealth around,” Barack Obama intends to raise taxes substantially (although only on the “rich”-that is, the comfortably upper-middle-class) in practically every single category: income, estate, corporate, capital gains, payroll, you name it. Furthermore, a 33 percent tax hike on dividends that is also part of Obama’s anticipated tax regime would hit just about everyone with savings in a mutual fund.
So Greg Mankiw, a Harvard economics professor, did some number-crunching to compare the effect of Obama’s hoped-for taxes increases to those of John McCain, who would keep federal taxes just about the way they are now, and even lower corporate taxes (which all investors-that means most savers-pay indirectly) and estate taxes, which are essentially an extra tax penalizing you for dropping dead. Mankiw’s math revealed to him that for every extra dollar he earned over his comfortable earnings as a Harvard professor and best-selling textbook author, he’d be able-after compounding interest on his savings–to pass on $4.81 to his children under the McCain plan but only $l.85 under the Obama plan, hardly enough to make it worthwhile to take those speaking engagements and other outside work by which professors commonly augment their salaries. Musing on his blog, Mankiw wrote:
“The bottom line: If you are one of those people out there trying to induce me to do some work for you, there is a good chance I will turn you down. And the likelihood will go up after President Obama puts his tax plan in place. I expect to spend more time playing with my kids. They will be poorer when they grow up, but perhaps they will have a few more happy memories.”
Amazingly enough-or maybe not so amazingly-many of Mankiw’s fellow academics expressed shock, shock that professors want to make money! Here’s Columbia law professor and Slate contributor Tim Wu:
“[Mankiw] It assumes that his only incentive to do any work outside of his regular teaching and research is to make money. This seems so counter to what the idea of academia is for, and is passed over so easily.
“Tenured academics like Greg M. have an incredible luxury: the time, freedom to work on what he wants, and a guaranteed paycheck (in his case, a large one). To say in that position you’ll only do ‘more work’ if paid seems an offense to the idea of academia itself. Academics aren’t supposed to be on sale or work only on commission.”
Oh, I see. Professors are supposed to work for free because they’re so pure-hearted. How about doctors? That’s an idealistic profession. Maybe they’ll start giving away their extra hours for nothing under the new Obama tax regime. Wu continues:
“The upshot: Obama’s tax plan will encourage a rich man like Greg M. to devote more time to the public and his children instead of paid speaking gigs, and gives a lot more other people more incentives to earn more money. Sounds pretty good to me.”
Dontcha love Wu’s passing moral judgment on “rich man” Mankiw’s current level of devotion to his family? Reboot Congress has a pretty good riposte:
“I do not know if the Professor is rich since I only know that his income is in the upper middle class. Perhaps he is not particularly frugal, but would become so if allowed to work for and save more money. I’ll agree that it ’sounds pretty good’ in one respect: Joe the Plumber can lowball Mankiw on a lot of those speaking gigs and probably do a reasonable job at the lectern.”
Thanks to Instapundit for the links.