The Rich Pay Too Little in Taxes, Unless They Pay Too Much

Greg Mankiw, an energetic blogger (you may have heard of him? he teaches econ at Harvard? and used to advise President Bush?) wrote a super-compelling piece in Sunday’s New York Times, whose headline says it all: “Fair Taxes? Depends on What You Mean By Fair.”

It is about taxing the rich, and begins by explaining why Warren Buffett can afford to always complain that he pays a lower tax rate than his secretary: most of Buffett’s income is derived from dividends and capital gains, which are taxed at only a 15% Federal rate, as opposed to a Federal rate more than twice that for ordinary income, bonuses, etc.

Soon after, the article becomes more of a philosophical discussion about the rich and taxation, and it is well worth the read. Even more interesting are the comments about the piece on Mankiw’s blog.

But perhaps the very most interesting thing about the Mankiw piece is the lead: “Do the rich pay their fair share in taxes? This is likely to become a defining question during the presidential campaign.”

This is a classic in winking understatement, for Mankiw was not only an advisor to Bush, but is also (as duly noted in the bio on his piece) an advisor to Mitt Romney on Romney’s current campaign.

I applaud Mankiw, the Times, and Romney for having the courage to produce what is essentially a position paper on taxation in the pages of the Times. As long as everyone’s cards are on the table, which they are here, I see no harm. But I sure would have liked to see the e-mails back and forth between the Mankiw and the Romney camp as the Times piece was being edited; and it sure will be interesting to see how this trenchant piece of tax commentary plays out in Romney’s campaign. I can just imagine one of his opponents whipping out the Mankiw article a few weeks or months from now and waving it in his face — “So the rich pay too much tax, huh?”

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  1. mgroves says:

    “Warren Buffett can afford to always complain that he pays a lower tax rate…”

    “Complain”? More like “brag”!

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  2. mgroves says:

    “Warren Buffett can afford to always complain that he pays a lower tax rate…”

    “Complain”? More like “brag”!

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  3. egretman says:

    To libertarians like Professor Nozick, requiring the rich to pay more just because they are rich is little more than officially sanctioned theft.

    There’s that word again, libertarian. What the heck is a libertarian? Show me a libertarian form of guvment. Has there ever been one? Have there ever been politicians elected to do nothing? I thought it might be the 1994 Republicans. But they wanted desperately to get into my pants. Into my bedroom. And certainly into my religion. And into foreign wars.

    Please someone! What is a libertarian?

    Vote Ron Paul!

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  4. egretman says:

    To libertarians like Professor Nozick, requiring the rich to pay more just because they are rich is little more than officially sanctioned theft.

    There’s that word again, libertarian. What the heck is a libertarian? Show me a libertarian form of guvment. Has there ever been one? Have there ever been politicians elected to do nothing? I thought it might be the 1994 Republicans. But they wanted desperately to get into my pants. Into my bedroom. And certainly into my religion. And into foreign wars.

    Please someone! What is a libertarian?

    Vote Ron Paul!

    Thumb up 0 Thumb down 0
  5. mathking says:

    Whether you agree with him or not, Buffett is most certainly complaining about the lower tax rate.

    In one of his big position pieces (http://www.berkshirehathaway.com/letters/2003ltr.pdf) he notes that for 2003 Berkshire Hathaway paid 2.5% of all corporate income taxes in the United States. The tone of the while piece is essentially that he does not think the wealthiest people and companies pay a fair share of taxes.

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  6. mathking says:

    Whether you agree with him or not, Buffett is most certainly complaining about the lower tax rate.

    In one of his big position pieces (http://www.berkshirehathaway.com/letters/2003ltr.pdf) he notes that for 2003 Berkshire Hathaway paid 2.5% of all corporate income taxes in the United States. The tone of the while piece is essentially that he does not think the wealthiest people and companies pay a fair share of taxes.

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  7. mathking says:

    I also note that on Mankiw’s blog, he incorrectly asserts that the CBO numbers he cites include payroll raxes. For the median $56200 the FICA taxes average just over 12% of total income. And those people are not paying less than 2% of income in income and other federal taxes.

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  8. mathking says:

    I also note that on Mankiw’s blog, he incorrectly asserts that the CBO numbers he cites include payroll raxes. For the median $56200 the FICA taxes average just over 12% of total income. And those people are not paying less than 2% of income in income and other federal taxes.

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