A wise column from Greg Mankiw on the present big picture policy impasse in the US.
I would only add that we already know the answer to the rhetorical question that ends his column, and we know it from a fifth country, Ireland, where the previously happy-go-lucky culture disappeared in a blaze of labor supply when marginal tax rates were reduced.
Who was my favorite student this term?
7 years ago
3 comments:
Identifying marginal tax rates as the reason for Ireland's increase in labour supply is at best inadequate. It's widely accepted that income tax cuts were neither necessary nor sufficient for the boom that occurred.
Just to clarify, my claim is a more limited one, namely that the tax cuts resulted in increases in labor supply.
Ah, okay, that's fair.
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