October 27, 2008
Those Adorable Little Mankiw Kids
I doubt that a lot of ThreeSourcers spend a lot of time worrying about the future inheritances of children of Harvard professors. But -- just for today -- tune in, this is pretty instructive.
Professor Mankiw suggests that his present personal needs are pretty close to sated, but that additional speaking and writing engagements would allow him to bequeath a little more to his three children. He compares the marginal effect of earning an additional dollar under the McCain, Obama, and Eidlebus '12 tax plans:
If there were no taxes [Eidlebus] so t1=t2=t3=t4=0, then $1 earned today would yield my kids $28. That is simply the miracle of compounding.
Disincentives to additional work from most Ivy League professors mightn’t be such a bad idea, but I thank Mankiw for this illustrative example that will be reflected in every industry and sector: $1.28 out of $28.00
UPDATE: I'm a little late to the party, I see that Instapundit and Hugh have both linked to this. Just the same, I think it needs the weight of ThreeSources behind it.