Taxing Nonsense From Greg "Gas N' Go" Mankiw

This happened to be one of the first items I read a couple of days ago after filling up the Doomsy-mobile, and I thought it was too ludicrous to ignore.

It is a Sunday New York Times Op-Ed (staying with them because they’re giving me so much material lately) in which economist N. Gregory Mankiw came up with some ideas on taxation that I would charitably describe as “interesting” about which I will take note shortly.

You remember Mankiw, don’t you? That champion of outsourcing who came up with the idea of redefining a job flipping burgers as “manufacturing” in an effort to hide the fact that the Bushco cabal is responsible for the worst job growth this country has seen since the days of the Herbert Hoover presidency (Mankiw was appointed Chairman of Dubya’s Council of Economic Advisers in 2003 – a prior post is here). That former adviser to the happily-now-defunct presidential campaign of Willard Mitt Romney (a recent stellar Mittster moment appears here – repeat after me, Willard Mitt; McCain won’t name you as veep regardless of what you do).

Well, Mankiw tells us the following about the dreaded corporate tax rate (it will take a minute to get to the part about gasoline)…

A cut in the corporate tax as (John) McCain proposes would initially give a boost to after-tax profits and stock prices, but the results would not end there. A stronger stock market would lead to more capital investment. More investment would lead to greater productivity. Greater productivity would lead to higher wages for workers and lower prices for customers.

Populist critics deride this train of logic as “trickle-down economics.”

Uh…yep, and one of the first practitioners of this con later called it out for what it was (more info appears here, including the following)…

The truth is that "Trickle-Down" was never intended to help middle income and poor Americans; it was intended to help the wealthy and Corporate America.

The economic policies of the Reagan era increased the trade deficit and provided easier ways for companies to "hide" money.

“Department of the obvious” stuff by now I know, but a reminder always helps. And as far as the “success” of Dubya’s tax cuts (as noted here)…

According to proponents of the tax cuts, cutting corporate income taxes and personal income tax rates was supposed to “improve the investment incentives of America’s businesses.” Small business owners, especially, were supposed to respond to lower individual tax rates by investing more and hiring new workers. In addition, more than $200 billion of cuts were specifically tied to business investment, reducing the cost as a way to encourage purchases of equipment, software, structures and machinery.

The cuts were an utter failure. Business investment has always recovered after a recession, but this was the most sluggish recovery in memory. As a result, business investment has grown 65% more slowly since the peak of the business cycle five years ago than the average for similar periods after nine cycle peaks in the last 60 years. (A business cycle includes a recession and the expansion until the next recession. The peak of a business cycle occurs just before a recession.)

In the recession and recovery of 1990-1994, instead of cutting taxes, Presidents George H.W. Bush and Bill Clinton signed tax increases into law. Yet businesses’ investment grew much faster during that recovery than it has during the last four years.

I guess the fact that Mankiw is proposing yet another tax cut to “stimulate growth” in spite of the vast body of evidence that it doesn’t work is not really new (he’s talking about $50 billion). And it’s particularly unappealing now given that the recession appears to have taken hold (call it what you want; it certainly doesn’t reflect anything approximating growth, OK?). Fortunately, that “straight-talking maverick” has informed us that he can make up the difference by “restraining spending” (where have we heard that before?).

Not to be outdone, though, Mankiw has another idea about how to make up the difference lost by yet another pointless, stupid tax cut, and that is to increase the gasoline tax…

With Americans consuming about 140 billion gallons of gasoline a year, a gas-tax increase of about 40 cents a gallon could fund a corporate rate cut, fostering economic growth and reducing a variety of driving-related problems.

Indeed, if we increased the tax on gasoline to the level that many experts consider optimal, we could raise enough revenue to eliminate the corporate income tax.

And this from a genius who wrote in the same column “when capital leaves a country, the workers left behind suffer” (duuuuhhhh!), yet continues to offer no apology whatsoever for dictating and implementing economy policy (featuring outsourcing/offshoring) which has been ruinous for the middle class that built the standard of prosperity upon which we thrived for many years until this ruinous cabal seized power in 2000.

So, to sum up, Mankiw continues to advocate the good life for this country’s ruling corpocracy (the "pay no price, bear no burden" crowd, let's not forget) while the rest of us continue to deal with ever-escalating gas prices, along with paying a tax on top of that probably in the area of at least $15-20 for filling up a mid-sized sedan (and if someone tells me, “well, it’s still cheaper than Europe,” they may discover an interesting, obtrusive and probably painful new way to insert a gas pump nozzle).

And the Times actually published this (they’re beginning to resemble the Inky more and more, I’m afraid).

Don’t laugh. I’m serious.

Update 11/28/08: If Mankiw had a conscience, he would admit he was wrong, but he doesn't, so he won't (here - h/t Atrios).