N. Gregory Mankiw professor of economics at Harvard and adviser to former President George W. Bush, says:
HERE’S the bottom line: Without any taxes, accepting that editor’s assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000. In effect, once the entire tax system is taken into account, my family’s marginal tax rate is about 90 percent. Is it any wonder that I turn down most of the money-making opportunities I am offered?
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.
That’s not the bottom line, this is: under the Republicans the effective tax rate on the author’s efforts was 80%. Under Obama it’s 90%. Saying that means he keeps twice as much money under the Republicans is at the same time factually correct and astoundingly thick. If the Republicans took away $9999, and the Democrats $9999.99, he wouldn’t say that the Republicans allowed him to keep 100 times as much of his money — that wouldn’t mean anything.
The story here is that both parties take nearly all his money. Granted that’s because he’s making more than 98.5% of all Americans, but that’s a healthy bite regardless of who’s in power.
Arguing the other side (formidable opponent anyone?) he’s completely ignoring the tax exemptions he no doubt takes advantage of, so it’s not as bad as it sounds. But it sounds pretty bad.
Ron Paul ’12, anyone?