At the end of a characteristically helpful post, Greg Mankiw writes:

Addendum: Some blogger named Barry Ritholtz poses a bunch of questions for me, which I won’t bother taking the time to answer. Unless, of course, he offers to incentivize me sufficiently. For free, however, I will answer one of them: “You teach at Harvard and live in ‘Taxachusetts.’ If state taxes are so important, have you considered teaching at Yale, and living in much lower state tax land of Connecticut?”
First of all, the top state income tax rate is higher in Connecticut than it is in Massachusetts.
Second, Yale? Are you serious? Yale?

This is one of the many reasons I love Mankiw. Naturally, I turned to Ritholtz’s questions next. His last point is very important. Unfunded tax cuts are expensive. If Ritholtz would like to join me in a national dialogue on how to slash public spending, I’d be very open to it.

But most of the questions reflect a decidedly quirky understand of how marginal tax rates impact work effort. I’d recommend reading:

(1) Alberto Alesina and Andrea Ichino on gender based taxation:

Women’s elasticity of the labor supply is substantially higher than that of men. The theory of optimal taxation implies that tax rateson income should be lower for women than for men. We analyze this argument in detail and show that given existing estimates of elasticities the optimal tax rates on men and women could be quite different. We also discuss how gender based taxation would interact with other policies having to do with possible gender discrimination in the labor market, with equity and with the social costs and benefits of increasing women’s participation in market activities.

And in 2006, Greg Mankiw highlighted Michael Kremer’s thought experiment in “Should Taxes Be Independent of Age?”

How much incentives are improved by such a tax cut, therefore, depends on the ratio of low-income to high-income taxpayers. That ratio, in turn, varies by age. Few 20-year-olds make more than $50,000 a year, so this tax cut would encourage almost everyone in that age group to work harder. Yet because many more 40-year-olds are in the high-income group, the tax cut would boost incentives for far fewer of them.
Not only is it easier to improve incentives for young workers, but they are also more likely to respond. Middle-aged workers are often locked into jobs that give them little choice about how much they work. Young workers are still choosing career paths and have more flexibility. As a result, their labor supply elasticities are larger. Kremer estimates that young workers are about four times more responsive to work incentives than the middle aged.
The bottom line: If the government wants to get the most economic gain for each dollar of lost tax revenue, tax cuts for younger workers are better than tax cuts for the middle-aged.

The elasticity of taxable income varies across groups and across individuals. When we create a marginal tax schedule, we’re trying to find the right mix overall. So the idea of, um, asking Greg Mankiw decided why he decided to serve in government for a few years as a kind of rebuttal to the idea that marginal tax rates impact work effort is … odd.

(2) Arpit Gupta summarizes research from a variety of economists, including Raj Chetty, on how norms and institutions can impact work effort in such a way that the impact of marginal tax rates is characterized by a time lag — the effect of an increase isn’t immediate; rather, it has a long-run impact as larger communities embrace new patterns of work and leisure.

There are more papers that would be helpful, but that’s a solid start. If you keep these basic ideas in mind, and I think most of you will agree that they are very, very basic, Ritholtz’s questions don’t make much sense.

And as a quick perusal of the Tax Foundation’s data would tell you, “Taxachusetts” ranked 27th in overall state and local tax burden in 2008. Indeed, New Jersey’s conservative governor has praised Massachusetts as a model for reforming his state’s tax regime, which has been praised by right-of-center analysts like Josh Barro of the Manhattan Institute:

Massachusetts’s Proposition 2.5 limits any town’s property tax levy increase to 2.5 percent per year, unless voters approve a greater increase. At enactment, Massachusetts had the country’s second-highest property taxes per capita. But since then, property tax growth has been slow — just a 22 percent rise in real terms from 1980 to 2007, compared to 68 percent nationwide and 102 percent in New Jersey.
This reform has allowed Massachusetts to shed the “Taxachusetts” label. In 1980, its residents faced the second highest state and local tax burden in the country. But because Proposition 2.5 effectively controlled property tax growth — and because legislators responded to the drop in revenues by restraining spending and not just raising other taxes — Massachusetts has fallen from the second-most taxed state to 23rd.

What I find disappointing is that David Leonhardt linked to Ritholtz’s post without identifying some of these glaring problems. Leonhardt adds:

I’ll add one more: Bill Clinton and Congress raised taxes in 1993. Mr. Bush and Congress cut them in 2001 and 2003. Economic growth was much stronger after the Clinton tax increases than after the Bush tax cuts. Indeed, average annual economic growth from 2001 to 2007, even before the Great Recession, was slower than in any decade since World War II.
Why didn’t the Bush tax cuts do a better job of luring people into the work force, inspiring them to start successful new businesses and lifting economic growth?

I think Leonhardt understands that there are lots of confounding variables, so let’s not be too hard on him. But surely he should have at least pointed out to his readers that Ritholtz’s questions suffer from a few basic flaws?

Then again, Ritholtz’s might not be making any broader point about taxes. Rather, he might have a deep interest in Greg Mankiw’s personal choices. In that case, all is forgiven.