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

Rajiv Sethi on the double taxation debate

Again, Richard Green’s comment that academic blogs can be as much about service as they can be about self-promotion…

Rajiv Sethi brilliantly lays out the issues at play in the double taxation debate on capital gains. And while the comment zone on the inter webs is usually the Land of Untrammeled Stupidity, there is lots of smart and clarifying questions and commentary.

Drop what you are doing and go read.

Also, note his remark about my recent topic of interest:

None of this should be in the least bit surprising. Note, however, that if the corporate tax were to be eliminated today, there would be a sharp rise in the price of equities and current asset holders would enjoy a windfall gain. Similar issues arise with respect to the mortgage interest deduction: eliminating this would result in an immediate decline in home values, severely punishing those who purchased recently at prices that reflected the anticipated tax savings over the duration of the mortgage.

The Gilt Fading on the Golden State: Richard Walker in the New Left Review

The New Left Review is one of those magazines I spend way too much money for simply because the writing is always so spectacular. There are three articles well worth the price of a copy in this issue: one is a piece on Tehran, a paradox of postmodern city by Asef Bayat, another concerns the dominance of informality and the erosion of wages by Micheal Denning (free access) and Richard Walker’s The Golden State Adrift (also free access).

Walker’s piece does a brilliant job explaining why I am so worried about Califronia’s fiscal mess, covering the housing mess in particular. I would give my right arm to be able to write a sentence as perceptive and clear as this one, on the way that rich whites are hammering coffin nail after coffin nail into the state’s future:

The fading white plurality continues to exert a disproportionate influence on the state. Markedly older, richer and more propertied, the white electorate has correspondingly conservative views: for many, immigrants are the problem, the Spanish language a threat, and law and order a rallying cry. Even the centrist white voter tends to view taxes as a burden, schools of little interest, and the collective future as someone else’s problem.

Go read.