Taxophobia

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"Taxophobia"

I think this Greg Mankiw post against stimulus and Brad DeLong’s riposte are worth reading. Then it’s worth considering that I think writers in the Krugman/DeLong/Thoma vein are all being a bit too literal in their disagreements with the center-of-center economists of the world.

What I take Mankiw et al to be saying is that taxes are really, really, really bad. And taxes on high-income people are really, really, really, really, really, really, really bad. They think that the electorate is joined by leftwing economists in massively underestimating the scale of the badness. And they look at population aging and growing health care costs and see that it’s likely that taxes will go up in the future. And they think this is an incredibly bad outcome, with massive negative long-term consequences. Consequences that are far more dire than any transient, years-long period of unemployment. Ergo, it’s really important to do the best one can to weather the 111th Congress—the most leftwing congress in decades, and the most leftwing congress we’re likely to see in quite some time—while minimizing increases in the spending level. Really, really, really important.

I can’t prove this is wrong, and Mankiw can’t prove it’s right, but as he notes this—the level of tax-aversion and related disagreements about the key drivers of the political process—is really at the root of the disagreement.

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