How much does government cost? Over the weekend, Gregory Mankiw laid out some numbers that answer the question.

If he wrote a magazine article for $1,000 and then saved the money until he died, he would pass $10,000 to his children. That’s in a world of no taxes.

We need government, so we need to have some taxes. How much of that inheritance will be left if the Bush tax cuts on income and estate expire? Only $1,000. Taxes of various kinds will wipe out the magic of compounding interest.

Mankiw’s point is to compare the effects of raising taxes and not raising them. But what struck me is how little money his heirs would have even if today’s tax code is frozen in place.

Remember, without taxes, they would inherit about $10,000. With the tax increases scheduled for next year, they would inherit $1,000. Without those increases, they would receive ….. How much? $8,000? $6,000?

No. The number is $2,000.

In other words, 80 percent of the 30-year value of his work today will be eaten by taxes–even IF the rates don’t increase next year, which they will.

John Maynard Keynes once dismissed the long-run consequences of government action by saying, “In the long run we’re all dead.” If Keynes is right, and people have no inkling of long-term results of their actions, maybe that’s just as well. After all, how much incentive is there for hard work if over time 80 percent of your work is taxed away?

A member on the U.S. Supreme Court once said that taxes are the price we pay for civilization. I think we’re being overcharged.