Peter Gordon and Greg Mankiw offer us some help in fixing the broken world

Greg Mankiw has somehow managed to struggle past the ordeal of some students not listening to him (which never happens to the rest of us) to pen some advice on how to fix the tax code. With some quibbles, it’s a good list, particularly the idea that you:

BROADEN THE BASE AND LOWER RATES The United States tax code is filled with deductions and exclusions that shrink the basis of taxation. The smaller base in turn requires higher tax rates to raise the revenue needed to fund government. The starting point of reform is to reverse this process.

This can work on multiple levels. So dealing with what Peter Gordon recently described to me as the frou-frou of the tax code would probably make it much fairer, or at least more tractable. But it also works for sales taxes. No, I am not saying tax food; I am saying that way too many states, like California, exempt services they shouldn’t. My favorite recent example came from Kevin Holliday: $300 Botox injections are exempt from California sales tax, but baby wipes aren’t. Given how much of higher income consumption centers on services, that exemption is counterproductive for both fairness and revenue.

Peter Gordon’s contribution has been to set forth his platform when he runs for president. I would vote for him, largely because I want his office (1) , but also because his list of plainspoken reforms is pretty good. I disagree with him on a couple of points, but particularly this one:

Envy is one of the seven deadly sins and leaders should never incite it.

Feh. I know we are supposed to buy into the idea that current concerns about inequality reflect mere envy, but we shouldn’t. History tells us that there are real problems with inequality (as well as envy). But the whining of the wealthy in this country that they just can’t chip in more taxes lest they not be able to have more $15K handbags and island getaways in Fiji (2) smacks of another one of the seven deadlies: greed.(3)

In the end, all this is horse poop. The lines between ambition, greed, and envy strike me as so fuzzy as to be irrelevant most of the time. Envy is desire (4); greed is desire, ambition is desire. So pretending these things are bad for us has a function–as moderation of our desires is good–but we all know we need these drives to get out of bed in the morning. And if this isn’t true, why aren’t all those supervirtuous gazillionaires competing to live in the smallest lots in the mobile home park while they focus on the things that truly matter, like the true love of family and contentment with what we have? (Easy, stomach).

(1) This is a case of envy.

(2) I know, I know those islands in Fiji are all job creation, for reals! Unlike those dented cans of soup purchased with Food Stamps, which create No Jobs Ever.

(3) Look, I was raised a fairly observant Catholic, and I still practice, so there’s no way you are going to out-debate me on topics contained in the category Things to Feel Guilt Over. Did you know envy wasn’t part of the original grouping of mortal sins? I believe Pope Gregory stuck it in there. I myself have all of Thomas Aquinas’ riffs on gluttony, thank you. Don’t even get me started on my trail-blazing in acedia.

(4) Sure, as Dante notes, envy isn’t just want: it’s the desire that others shouldn’t have things you don’t have. Ok. But where does ambition come from if you don’t see other people with what you want? And I’m a bit tired of this envy idea being used in the same sense of wondering why the superrich shouldn’t be expected to pay taxes to start dealing with a deficit incurred for spending on lots of things that, if the numbers are any indicator, benefitted them greatly.

Dantes inferno artwork

3 thoughts on “Peter Gordon and Greg Mankiw offer us some help in fixing the broken world

  1. I’m ‘Feh’ about Mankiw too. I think the biggest problem we developed over the last 30 years was a lost cultural understanding of the moral AND practical benefit of maintaining a healthy degree of progressivity in tax codes. Sure broad… and sure consumption-based… as secondary things to shoot for. But progressive needs to always be front and center. I even put ‘broad’ and ‘consumption-base’ astertiary concern – behind a secondary concern of careful design such that revenue flows stay as consistent as possible through economic downturns – Perhaps getting even more clever, shifting revenue sources away from things that hurt demand during demand downturns, and towards overheating things during upturns.

  2. Thanks for the shout out.

    What is even more absurd is that California does not tax books downloaded on to my iPad. But a book purchased in local bookstore (assume one still exists) that is taxed. Keep in mind that the books I download are from a California-based company (Apple) and associated with my California-based billing address.

    Moreover, according to this iPad owners have more then double the median income. I guess the rich keep getting richer.

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