Monday, December 06, 2004


Last week’s comments boosting a sales tax by N. Gregory Mankiw, chairman of the Council of Economic Advisers to President Bush, were little noted and are already skittering off into the shadows, disappearing into crevices on tiny, insectile legs.

When these ideas are exposed to light, ordinary people are filled with loathing and an instinct to kill. Republicans know this, so they’re happy there’s plenty of distraction: Bright colors flash by on television screens, drawing attention, while these ideas crawl through cabinets and race across sleeping children.

On the off chance these little ideological cockroaches are spotted, Republicans have outfitted them with tiny, sequined red, white and blue outfits — top hats, vests, spats and little canes — meant to convince the unwary that what they’re seeing is good and embraceable, rather than dirty and scummy.

This particular bug wants Americans to pay more taxes when they buy things, rather than based on what they earn. Not surprisingly, this hurts poorer people, who spend a higher proportion of income even by buying such essentials as food, and benefits richer people for whom such things as food are a tiny percentage of income, and probably far more of a luxury. (Think hot dogs vs. caviar or cola vs. fine wines.)

Here’s what Mankiw said Thursday at a conference held by the American Enterprise Institute and International Tax Policy Forum, as quoted by Bloomberg News:

Under an income tax, a person who immediately spends all his wages pays lower taxes over his lifetime than his neighbor who earns the same amount but chooses to save and invest in order to enjoy a more prosperous retirement or to leave a bequest to his children. Savers would no longer be disadvantaged relative to spendthrifts.

Who are these thoughtless people spending everything they earn instead of saving and investing?

To start, there are more than 7.4 million workers earning the federal minimum wage.

The federal minimum wage is $5.15 an hour, meaning someone with a full-time job paying that earns $206 a week. It may be difficult to imagine living on $206 a week, or $10,712 a year, but that’s actually above the federal poverty threshold for a single person with no kids: $9,573 for someone under the age of 65. For a family of three, such as a full-time worker with a spouse taking care of a small child at home, it’s short of the poverty threshold by $4,112. Even taking into account the earned-income tax credit, says the Economic Policy Institute,

the current minimum wage is still inadequate to support a single parent with two children. In 2003, a single parent working full time with two children would have a combined earnings and tax credit of $14,097, only 95 percent of the 2003 poverty threshold of $14,824 for a family of three.

And the numbers of people living in poverty is growing, the U.S. Census Bureau says, to 12.5 percent of the U.S. population last year from 12.1 percent in 2002, an increase of 1.3 million people.

This would be a good time for Mankiw, that cockroach wrangler, to visit the Twilight Zone, and wake up tomorrow as someone earning the federal minimum wage. It would be instructive to see how much money he socks away for his kids and retirement while earning $5.15 an hour, and how he sets an example for his “spendthrift” peers.

Or he could wake up tomorrow as a cockroach, which haunt the homes of the poor, and get stomped on.


Indri said...

This is great, Marc; I like the cockroach imagery, and the line about the tiny sequinned spats and canes.

As one of those bad citizens who puts every cent she makes into rent, food, and library fines, I am quite ashamed to be such a drain on the system. Bring on higher sales taxes! Especially on food, because who really needs that?

eric said...

No where is something like this more evident than your local daycare. Trust me. I see it.