Hoisted from the Archives: The U.S. Macroeconomic Situation as of June 18, 2009
The Long Twilight Fight Club

Stephen Gandel Is a... (Time Magazine FAIL Edition)

Stephen Gandel writes:

How High Should Taxes be Raised?: A blogger for Ezra Klein's policy blog over at the Washington Post recently asked a number of economists what they thought the top tax rate for the wealthiest Americans should be, and the answers were all over the map. Emmanuel Saez, a prof at Berkeley and a tax expert, said the top federal income tax rate, currently 35%, should be raised to 69%...

1) What my colleague down the hall Emmanuel Saez says was is if you want to maximize tax revenue the top tax rate should be 69%--which means a federal income tax rate of 60% given the existence of state and local taxes:

Ezra Klein - Where does the Laffer curve bend?: The tax rate t maximizing revenue... e=.25 seems like a reasonable estimate... which means a top federal income tax rate of 69% (when taking into account the extra tax rates created by Medicare payroll taxes, state income tax rates, and sales taxes)...

And what my colleague Emmanuel Saez (along with slemrod and Giertz) says is that the top tax rate ought to be lower than the revenue-maximizing tax rate unless you do not care at all about the incomes of the wealthy. But we do care about the incomes of the wealthy--all else being equal, we would all be happier if Bill Gates were a little richer and the rest of us were just as well off. And even though Bill Gates's income is earned by somebody very rich, a large chunk of it is spent improving the lives of people who are very poor--see "nets, mosquito."

Thus Emmanuel Saez simply does not say what Gandel says he says.

2) Dylan Matthews has a name. Gandel should use it--unless, that is, he wants people to call him "the nameless stupid one who works for Time.

Why oh why can't we have a better press corps?

This is not rocket science, people.

Justin Fox, who established Time's Curious Capitalist weblog, would be rolling in his grave if he had one...