This is a variant of the "lucky ducky" argument used in a Wall Street Journal back in 2002, about Americans who pay no federal income tax because they're "lucky" enough to have really low income.

The brain-warp of it has been mocked by many, including "Tom the Dancing Bug" cartoonist Ruben Bolling (at Salon), who occasionally pens strips about "Lucky Ducky: The poor little duck who's rich in luck".

Thanks for this post. I realize in reading it that by showing up for work today that I'm going to get paid and then taxed at the federal, state and local levels.

So, there's just no point, is there?

And on the subway this morning I walked by a badly dressed, unshaven guy who had a cup in front of him. He was begging for change.

He's got it so easy! He's not paying taxes on those change donations.

I need to rethink my life now.

thosethingswesay.blogspot.com

I hear some of the early trials via a friend that listens to Rush, but haven't heard this howler yet.

This is simply a special case of the laughable Laffer "curve". Obviously health care costs and the regressive SS tax have zero effect on career choice, but a slight difference in future earnings does. Yeah, right.

I guess if one doesn't attend college one is unable to answer this question--is an increase in income, with only the increase taxed at a higher rate, worth it?

Isn't it still the case that higher brackets only apply to the "overage", the income above a cap? If so, any increase is an increase, at any tax rate less than 100%. No case of increased income yields less aggregate after-tax income. And unmentioned is the difference between a job and no job. Does anyone argue that college education reduces job opportunities?

Ironic that as we learn more about ourselves through social science and psychology we end up being manipulated more by "framing" of questions to preclude thought.

Lucky Ducky is hilarious. :-)

You're right--only marginal rates of 100%+ would leave you with less after-tax income.

But you have to get that Becker especially is cuckoo for marginal analysis, ie, the belief that any tweak to pretax income, no matter how small, leads to big behavioral changes.

No evidence to support him*, but he doesn't let that get in his way.

* I'm not denying that marginal changes in taxes can change behavior.  The evidence does, however, strongly contradict the notion that tax changes of the type we're discussing lead to changes in big (or even small) life decisions.

I think you've been too cautious about naming what "organized group" the opinions of these two esteemed economists represent, leaving us to wonder.
Becker and Murphy are Hoover fellows publishing in The American, owned and operated by the American Enterprise Institute, devoted to the amusing myths of free market economics and "capitalist democracy," known elsewhere as unregulated greed.
I notice there's also an article in the same issue in which the head of DOW Chemical gets to bemoan systemic flaws such as litigation laws that drive his enterprise overseas. I notice AEI's home page also touts a new publication by Frederick Kagan and William Kristol, whose foreign policy expertise has contributed so much to our notable success in Iraq.
Dogs, fleas.

You mean they have to go to college to work for the Hoover Institute?

John 

http://www.haberarts.com/

Under Herbert Hoover the U.S. economy had the worst performance in its history. So the question arises, why would anyone want to name and economic belief tank after him?
The best explanation is that the institute's objective is to undo the New Deal. Like Archie Bunker, they want a President like Herbert Hoover again.

. . . the increased earnings gap [is] caused by education . . . . Becker & Murphy

. . . [Becker & Murphy] tend to frame this argument in terms of the rising earnings of college relative to non-college graduates. But . . . . Jared Bernstein

Jared!

You and Mishel say the "college/high school" premium is 45%; Becker & Murphy say it's 70% ("the wage premium received by college-educated workers compared with high school graduates"). That's a huge difference.

Who's right?

They argue that to make the tax system more progressive—e.g., to let the high-end Bush cuts expire on schedule—would be advocating “a tax on going to college and a subsidy for dropping out of high school.”

I think conservatives put out arguments like this to show off to liberals justs how little is required to make money as a pundit on their side. Without the constraint of reality holding them back, I imagine it's a big game behind the scenes, trying to come up with the most ludicrous argument that can be sold to a large number of people.

PT Barnum would have been proud.

Just to be clear, the quote comes right out of their piece, to which I link. 

You want to draw a distinction between what they 'argue' and what they 'conclude,' go ahead, but the point remains the same.

Economist A; "Its clear with sunshine."

Economist B; "I see a torrential downpour."

Economist C; "Its snowing."

I think Economists learn all they need to know in their first year of study; the second year of study simply confuses all they learned in the first year. Ergo, contradictory weather reports.

The rationale you're describing to justify a regressive tax structure isn't simply vodoo economics, it's bizzaro economics. Their arguments are so throroughly discredited and this is what they have left? Kids might not go to college because Democrats will raise taxes on the wealthy? As Ali said to George Formeman: George is that the best you got?

Intrepid Liberal Journal

Jared, after reading your EPI brief, I want to point out to other readers who may have missed it: this link is a far more productive one than that leading to the nonsense written by Becker and Murphy. Jared's EPI brief actually has something interesting to say. Read that to learn something. Read Becker and Murphy only to laugh . . . or weep . . .

The topic you'ver raised, Jared, is an important one. Republican economists have been quite successful in using "incentive" arguments to justify their call for lower taxes on wealthy income earners. You are right to ridicule them whenever they are used to defend ludicrous policy proposals.

I wonder if you are aware of a market-based counter-argument that heterodox economists should be able to use to completely discredit the 'incentive' argument whenever it is raised? It goes something like this:

Because (A) markets work, and (B) a [no-loophole] Progressive Income Tax collects money in a way that always preserves each taxpayer's relative position within the hierarchy of all disposable incomes, each taxpayer is spared the decline in purchasing power it would otherwise have experienced if only she had paid the tax.

Suppose Congress were to make the income tax more steeply progressive. If you are a rich person, no matter how steeply Congress increases your rate of taxation, those who earned more pre-tax income than you would end up with more disposable income than you after everyone pays her taxes. Those who earned less pre-tax income than you would end up with less disposable income than you after everyone pays her taxes.

Because we have a market economy, this across-the-board reduction in disposable incomes means that prices in luxury markets would not hold, since there would be fewer dollars in the hands of rich people that they could throw at luxury consumables. Prices would be forced down to levels that the wealthy could still afford. Lower disposable incomes would buy the wealthy just as much as higher disposable incomes would have bought them previously. The purchasing power of their incomes would remain unchanged.

If rich people end up with the same purchasing power even after they've paid steeply higher income taxes, then how can it be said that higher across-the-board tax rate increases would actually present any kind of disincentive?

(For an elaboration of these arguments, you might want to read The Progressive Income Tax: Theoretical Foundations. Cornell's Robert H. Frank seemed to think they were quite persuasive; perhaps you will also...)

Very interesting stuff.  I found the part about prices provocative, and wonder about these relations.  Does the article have any empirical analysis of this part of the argument?

I read the intro/bullet points and will read the rest ASAP.