It's tough to do it in a state because rich people will leave the state to a more tax friendly state. As happened in Kansas, they don't care what havoc it reaps in that state.
As the linked article points out, if lots of rich people would move to tax-friendly states, then why do so many of the richest people live in states with the most progressive tax codes, e.g., New York, California, Connecticut, etc.?
Actually, a Stanford professor wrote a whole book on how this premise is actually false -- clue is in the title: The Myth of Millionaire Tax Flight; How Place Still Matters for the Rich
I know about that book and I've always agreed with it. But reading current articles, there is definitely a trend of people leaving high income states. I believe most who do that will come to regret it. They are moving to areas where the environment is becoming very inhospitable. Texas, Florida, South Carolina and North Carolina have become magnets for them.
Hugh Spitzer, is a constitutional law professor at the University of Washington, and has been a prominent proponent of changing the way Washington state taxes citizens. He favors creating a system that incorporates a moderate income tax to create similar tax-payment percentages across income levels in this state.”
But he’s not holding his breath that this case will be the spark that ignites that kind of constitutional change.
“While I’d be thrilled if our state Supreme Court were to overturn the 1933 case, and expressly say that an income tax is constitutional … my guess is they’re not going to do it,” he said. “It’s very straightforward and really easy for them to recognize that this is a straight-over capital excise tax, rather than some kind of property tax. They don’t really have a reason to make a constitutional decision.”
Citizens of the state await a state Supreme Court decision. The case was heard January 26, 2023. I am unclear on when we will hear a decision.
From a strategic standpoint, the US would do well to nationalize education to educate & pay teachers more effectively with living wages, eliminate systemic racists educational barriers, and solidify investment in our kid’s education just to start. Only MMT offers the economic understanding to make this policy a reality. I’d appreciate reading your reviews of such a policy through the MMT Lens.
I guess Republicans in these red states will never learn the disastrous impact of their tax cuts and austerity measures will have on the people they claim to serve. The same nonsense of them saying it will promote economic growth when the exact opposite is true. Kelton is right, the billionaires tax won't go anywhere, the donors won't allow that to happen.
And the federal govt. could send more money to the states via revenue sharing with the stipulation that state taxes are not reduced.
The legislature in Washington created a Working Group a year or so ago to look into tax reforms for both business and individuals. They quickly shelved any form of individual income tax because, as one member declared, "they tend to increase over time." WA has no income tax but has a hefty sales tax. What the Working Group ignored is that this state's sales tax routinely increases over time.
IMO the sales tax should be abolished and replaced with a progressive income tax. But there is a state constitutional provision requiring equal rates that seems to prohibit a progressive tax. That ignores the unequal impact of a sales tax which runs, on average as a percentage of income, from INFINITE on those unemployed and not receiving unemployment benefits (72% of the unemployed nationally and in WA) to about 15% for low-income workers and less than 2% for Washington's top tier of income recipients. This state also has a revenue tax on businesses. Most or all of the majors here find a way to legally conduct business elsewhere. Boeing, which moved its HQ to a state WITH an income tax, has been reported to routinely sign many or most of its contracts for new planes at 30,000 feet over international waters.
The Federal government had a revenue-sharing program until Ronald Reagan, who stopped it. However, he didn't stop Federal mandates on the states, so they had to come up with ways to provide those services without the money to accomplish them.
Good question. I live in Connecticut and the proximity to New York kept many people here. New York is still a real financial center. There are many people moving from California to Texas. Connecticut has been losing population for awhile but lately is holding its own and I think even gaining some. I don't want it to gain too much. I like it the way it is.
I’m all for taxing corporations and wealthy individuals more than is currently the case. But not until we can improve the subsequent allocation of those taxes. The federal government isn’t accountable to the voters for spending. Waste and misallocation is rampant. Billions leave the US monthly to corrupt entities.
I don't know why you posted this comment on Stephanie Kelton's blog, because any MMT'er knows that the "allocation" of all Federal taxes is to be deleted from the system. The Federal government isn't dependent on taxes for spending.
A more radical, and perhaps more marketable, agenda for those states would be this:
(1) Eliminate state corporate income taxes entirely. They are a zero-sum, full-employment program for tax lawyers and accountants and serve no useful purpose.
(2). Leave most earned income untaxed, except perhaps above a very high threshold: Maybe $1 million/year.
(3). Impose a steeply progressive tax on capital gains, with the tax rate tied to the length of time between purchase and sale of capital assets (so as to discourage high-frequency trading and encourage longer-term investment).
(4). Demand federalization of funding for public goods -- education, housing, health care, infrastructure -- that markets can't and won't provide equitably, thus eliminating the need for states to fund such programs using either highly regressives taxes -- on sales and fuel -- or property taxes (which, when relied upon to fund local public education only exacerbate inequality). Distribute these funds to states on a per capita, inflation-adjusted basis and let the states control how they are spent (subject to basic rules regarding, e.g ., non-discrimination and transparency), thus making state legislatures and governors -- not Congress -- the target of complaints about how the money is spent.
I'm gonna run for President on that platform in 2024. Does anyone want to form a campaign committee for me?
Makes a lot of sense. The federal government being monetarily sovereign could and should fund the states. State taxes are almost entirely redundant from the individual standpoint. They should have the right to tax bad actors of course, but why should I have to pay 9.9% additional city, county and state tax on everything I buy where I live? Couple your ideas on state and earned income taxes with my 3 policies of a 50% Discount/Rebate at retail sale, a 25-50% debt jubilee policy at point of loan signing and a $1000/mo. universal dividend from 18 until you get planted...and thats a platform that EVERYONE could root for...except finance of course, but they are few and we are many.
Or the New Monetary Paradigm Party. Or maybe the Make Systems Serve You Party.
In our technologically advanced society all a paradigm changing idea and its reflective policy program requires is a platform. That's why if you could get a Steve Keen, Stephanie Kelton, Randall Wray, Michael Hudson etc. to see its efficacy, and just get people to do the simple math of how it benefits them Hugo's famous saying: “Nothing else in the world…not all the armies…is so powerful as an idea whose time has come.” ...will carry you through.
I’m so glad you expanded the federalization funding programs...they’re more but education remains a critical strategic investment. Count me in on your campaign committee, not to form it but work the MMT strategy agenda.
Dr Kelton, is there any research on how to determine what “fair share“ of jurisdictional revenue any individual taxpayer should pay? I’ve seen arguments ranging from equity-focused increasingly progressive tax rates, to behavioral economics driving individuals to make tax-efficient decisions, but struggle to find an analytical framework that doesn’t devolve into envy vs greed.
I wish the federal gov't would sit down and have "THE TALK" with Americans. It might go something like this:
"Here in the U.S. we operate a capitalist economic system--whether you like it or not. And this system will allow a few enterprising individuals to make an awful lot of money. But here's the thing. Where do these magnificently successful people imagine their fortunes came from? Well, so far the US Treasury/Federal Reserve has spent about $31.5 trillion dollars into the world economy that we have decided (so far) not to claw back in taxes. So, in effect, the US gov't has proclaimed: 'Let our citizens (and the rest of the world) compete for these dollars, and after a period of time we'll see where things stand.' But be aware that we may want some--if not most-- of our money back.
In the game of Monopoly, the eventual winner doesn't get to keep the money--that would be ridiculous. It's returned to the "bank"--which actually works more like a Treasury, if you think about it. In the same way, we expect successful people to return their winnings to the Treasury (in the form of taxes) during and at the end of their very successful lives. But not all of it. It only seems fair that they be rewarded for their entrepreneurial expertise and vision. Anything up to about--oh, I don't know--a billion dollars seems like compensation enough. I mean, remember, it's the gov't's money, and we let these wealthy folks "play" with it. But now the game is over. So live out the rest of your days like royalty--and give the rest back."
MMT has shown us what the true source of our "financial wealth" is--the U.S. gov't's deficit spending! After all, where else could the US dollars in your savings account have come from? You don't have a "Benjamin Tree" in your backyard. As the great Randy Wray says: "Balances have to balance!" If the federal gov't runs a deficit, it means by force of logic that the private sector (and the rest of the world) must run an equal surplus. Stephanie has eloquently made the same point.
The wealthy should be proud (if they've done it legally and ethically) of the contributions they've made to society. But it's childish for them to think that they "deserve" to keep their total winnings that only exist due to the clever "game" established by the federal gov't.
Wally, love this. A good way to get it out there, if yo have the resources, is to hire two or more actors, stage a debate on a soundstage. GEt a director who can make it seems like a debae contest. use fake names and make it seems like these are live candidates for Nov. 2024 President. This approach will make your points EMOTIONALLY ACCESIBLE to teh general public. Release the video as widely as possible. Contact me if you wish writerly support Bruce Dickson HealingToolbox atttg male #com
Just saw that interview. Your views on tax vs MMT are totally contradictory. On the one hand, deficits worries are a myth and we can print money as needed. On the other hand, 'tax justice' requires ever higher tax rates and outright wealth confiscation.
Today we tax corporate profits and the dividends that are paid. We tax investor earned income and dividend & cap gain income. Some of that after-tax income is invested and the dividends & cap gains it generates are taxed again. Now you want wealth taxes on accumulated wealth. You want to eliminate the step up in basis at death and ostensibly still want to keep estate & inheritance taxes.
How many times should each dollar be taxed? If deficits don't matter, why do we need to tax anyone's income at all? What is 'just' about a tax code in which 50% of citizens pay zero federal income tax and 10% of earners pay 80% or more of all taxes?
Is our tax system one that's meant to raise federal revenue or is it supposed to be a system for social activism? Our current federal tax code is raising record revenue now - what is the problem? Many states have surpluses and reserve balances - why do they need more tax revenue?
You are confusing state financesa and budgets with the federal finance and budgets.
States absolutely have to tax to spend.
As to why the federal govt needs to tax, you are looking at it too simplistically- you need to read Kelton's book The Deficit Myth in which she explains the money creation-taxation loop quite well.
I read it almost three years ago. I predicted then the inflation that is now upon us. If states have surpluses and record tax revenues, they don't need more revenue. MMT is not modern or a theory. It will not work in the long run.
Corporate price increases are only part of the issue. A minor point at that. Even with corporate price increases over the past year, corporate profits are already weakening. See the latest quarterly earnings reports for evidence.
Data is where my facts (not ideas) arise. The massive leap in M2 money supply was a guarantee of an inflation spike, it was not difficult to predict. If you want to study other economists who can help you better understand, start with Milton Friedman. Read Henry Hazlitt's 'Economics In One Lesson'. John Taylor at Stanford is also very good as as Brian Wesbury.
Let's attempt to make this a little easier for you comprehend! Why did the price of cars suddenly increase starting in 2020 and only now is beginning reseed?
"Demand pull" " inflation is when demand out strips supply, which "then" allows prices to be increased. In every case in US history where we have seen "demand pull" inflation it has come as a result of a disruption on the supply side (WW2 and COVID 19 primary examples). Over the last 30 years prior to the COVID 19 pandemic the only significant sources of inflation in the US has come has a result of abusive market pricing power (monopoly power) from industries like the pharmaceutical industry, education, housing, health care industry, big tech, and energy. How much time do you spend trolling them?
The other type of inflation we are dealing with today, and in the past, is "cost push" inflation coming from the fossil fuel cartel. How much time do you spend trolling them?
The next thing we need to acknowledge as being a source of current inflation over the last 3 years is a basic understanding of how capitalism works! Production is based on what is forecast to be sold. Changes in consumer consumption will temporarily create shortages till forecasts are determined to be worth retooling (temporary or permanent). Again, pricing power from demand exceeding supply. When the oranges freeze in Florida, which decrease's the supply and increases the cost consumers pay for oranges, is this because of the money supply or the reduced supply of oranges?
Do you remember the 2017 tax cut Trump job program that was going to create all that economic activity? Then all of that QE between the tax cuts and the pandemic attempting to increase inflation by allegedly according to orthodox economics increase the money supply. It didn't make one bit of difference on the feds attempt to reach fed target rates on inflation.
When you have a reduction of supply that designed to meet a given forecasted demand, ANY SPENDING has the potential to be inflationary. The whole "quantity theory of money" is a ridiculous model using ridiculous endogenous assumptions. The Weimar Republic fiction or "printing money causing inflation" has it backwards and is design to bamboozle the uninformed.
Some is supply disruption. The bulk of today's inflation is due to money stock growth. Read 'The Price of Time' by Chancellor. Many of the world's great historical financial busts were associated with low interest, abundant money, and the speculation that followed them.
PS - if inflation is purely due to corporate greed, where was inflation between 2000-2021? Corporate profits rose but inflation remained controlled. Can you explain how that happened?
Talk about contradiction. 2000-2019 there was no supply side disruptions. Just Trump trade tariffs that increased costs on imports. Did the corporation increase prices to increase profits or was it due to increased costs, or both? If its just due to the money supply that would price markups. How does an increased money supply increase costs on corporations? 22 to 25 million people lost their jobs in 2020, on top of that the CARES act was 6.2 trillion dollars which primary went to corporations. After the American rescue act was passed which focused on funding going to people with a high marginal propensity to consume corporation started increasing markups. Some of it was due to workers asking for higher wages and increased energy cost as a result of the Russian invasion of Ukraine. It's not that hard to explain.
Increased money supply raises demand. As more dollars chase the same amount of supply, prices rise. Go to a college town bar on homecoming weekend. Give every person walking in a couple hundred in free extra cash to spend. What's going to happen to the price of beer? The Fed began monetizing COVID federal spending in 2020. Inflation began then. By January 2021, prices in many basic commodities were up 20% to 70%. It's not complicated. Just a mess now.
"If deficits don't matter, why do we need to tax anyone's income at all?"
Because MMTers are still stuck in the old paradigm that says we have to worry about inflation. MMTers are right about money mechanics and you are wrong, make no mistake about that, but neither you nor them are looking at what a policy of a 50% Discount/Rebate policy at retail sale would do. It would end inflation forever. That would free us to run the kind of fiscal deficits to renew our infrastructure and confront climate change. It would also claw back the purchasing power everyone has lost over the last 50+ years due to inflation and shipping jobs overseas.
I've rebutted every misconception and every critique, here and elsewhere, that is simply the assertion of an orthodoxy that the new monetary paradigm destroys. Neither Stephanie not Steve Keen will answer my posts. I suspect that's because they don't actually have answers to my new paradigm's policy program...except in their own minds which again still have orthodoxies that the new paradigm destroys. I'm happy to be questioned by them. Bring it on. Lets see whether I'm a crack pot or the monetary version of Copernicus, Gallileo and Kepler all wrapped up in one.
The clock is ticking on our socio-economic and political instability and on climate change. It's time to "go long, go deep." And remember, to hold onto a good reform like MMT when a paradigm change is possible is an unethical act.
There are several reasons for taxing, and MMT describes what they are. And yes, some of those reasons are "for social activism." That's what a government is for: to protect the weak from the ruthless.
By asking if the tax system is "to raise Federal revenue," you're falling into the "taxes fund spending at the Federal level" trap.
Where in the Founding documents will we find the language saying governments job is to protect the weak from the ruthless? If MMT works, we never need to tax again. Just print money.
Its simply a matter of elementary ethics that government should protect the weak from the powerful. Conservatives and libertarians often forget that ELEMENTARY consideration. That's also how they can always manage to side with the powerful in the maintenace of their power.
The truth is both liberals and conservatives are mostly stuck in the obsessive dualism of thesis vs antithesis instead of seeking a genuine synthesis. And of course Finance loves the fact that both sides love yelling at each other instead of LOOKING for the synthesis of a paradigm change.
A genuine synthesis benefits EVERYONE and SOLVES problems. You have to decide whether you like solving problems more than arguing about them.
How about, "government of the people, by the people, for the people!" Is that not good enough for you? Is that not what you believe is the job of are government? Trolls like you only express the economic freedom to exploit anything and everything. You don't come to this site operating in good faith, outside of trolling debunked nonsense. Is this the "freedoms" we send soldiers to die for.
MMT answers far more of the issues we see in the modern economy than does Keynesian theory.
If you read the book then you should understand it.
The point of progressive taxation is not necessarily 'more revenue" immediately though that could be an outcome. Gaining more revenue does allow states to weather downturns when revenue drops because otherwise they have to go into disruption of austerity measures. We have seen this in Michigan since the early 1990s as Republicans cut taxes and when a downturn hits, critical programs end up getting short funded.
What Keynesian are you talking about? Neoclassical or classical? The textbook written by Mitchell, Wray and Watts attributes the foundation Context of the textbook primarily to Keynes's "General Theory." In general it supports the theory shared by it's writers. You find just about any observation made by MMT somewhere in Keynes writings. The problem is, is that the real Keynes was purged from University economics classrooms. Example: I just finished a small book (paper) by Keynes written in 1940 called "How to Pay for the War." This was paper written to the UK from Keynes on how to control inflation at the outset of WW2 as production was being again shifted to war materials. Near the end of the book (paper) Keynes starts talking about the wealth accumulation by the private sector due to the large accumulation of government debt (spending) during the war. He makes the comment that it should not be just "entrepreneur" as in WW1 who acquires the wealth from the government deficits (net spending). The workforce needs to share in some of the accumulation of wealth by the private sector from government deficits (reason for not having wage controls). There it was right there by Keynes himself, government deficits = non- government surpluses. The very thing that shocks people (initially) the most about MMT wasn't even something Keynes took as being disputable.
It's the "New Keynesians" that come down on the Neoclassical side of the flow chart. "Post Keynesians" are on the classical side of the flow chart more in line with MMT. Then there was Keynes himself. I do think your right that MMT is more current and is able to better answer today's world. Keynes understood fiat currencies. The UK started using fiat currency during WW1 for domestic use to save gold and silver for foreign exchange.
Right, I should have said that MMT nievely assumes effective investment of deficit spending regardless of the source. The federal government isn’t effectively investing the enormous debts being incurred today. So what you’ll have is more debt not benefiting those debt holders. Investment of any printed debt should be carefully invested with the approval of the citizens.
It's tough to do it in a state because rich people will leave the state to a more tax friendly state. As happened in Kansas, they don't care what havoc it reaps in that state.
As the linked article points out, if lots of rich people would move to tax-friendly states, then why do so many of the richest people live in states with the most progressive tax codes, e.g., New York, California, Connecticut, etc.?
Actually, a Stanford professor wrote a whole book on how this premise is actually false -- clue is in the title: The Myth of Millionaire Tax Flight; How Place Still Matters for the Rich
https://www.sup.org/books/title/?id=27987
I know about that book and I've always agreed with it. But reading current articles, there is definitely a trend of people leaving high income states. I believe most who do that will come to regret it. They are moving to areas where the environment is becoming very inhospitable. Texas, Florida, South Carolina and North Carolina have become magnets for them.
You mean, "from," surely, or else have had head-in-sand syndrome for three years.
Hugh Spitzer, is a constitutional law professor at the University of Washington, and has been a prominent proponent of changing the way Washington state taxes citizens. He favors creating a system that incorporates a moderate income tax to create similar tax-payment percentages across income levels in this state.”
But he’s not holding his breath that this case will be the spark that ignites that kind of constitutional change.
“While I’d be thrilled if our state Supreme Court were to overturn the 1933 case, and expressly say that an income tax is constitutional … my guess is they’re not going to do it,” he said. “It’s very straightforward and really easy for them to recognize that this is a straight-over capital excise tax, rather than some kind of property tax. They don’t really have a reason to make a constitutional decision.”
Citizens of the state await a state Supreme Court decision. The case was heard January 26, 2023. I am unclear on when we will hear a decision.
From a strategic standpoint, the US would do well to nationalize education to educate & pay teachers more effectively with living wages, eliminate systemic racists educational barriers, and solidify investment in our kid’s education just to start. Only MMT offers the economic understanding to make this policy a reality. I’d appreciate reading your reviews of such a policy through the MMT Lens.
I guess Republicans in these red states will never learn the disastrous impact of their tax cuts and austerity measures will have on the people they claim to serve. The same nonsense of them saying it will promote economic growth when the exact opposite is true. Kelton is right, the billionaires tax won't go anywhere, the donors won't allow that to happen.
And the federal govt. could send more money to the states via revenue sharing with the stipulation that state taxes are not reduced.
The legislature in Washington created a Working Group a year or so ago to look into tax reforms for both business and individuals. They quickly shelved any form of individual income tax because, as one member declared, "they tend to increase over time." WA has no income tax but has a hefty sales tax. What the Working Group ignored is that this state's sales tax routinely increases over time.
IMO the sales tax should be abolished and replaced with a progressive income tax. But there is a state constitutional provision requiring equal rates that seems to prohibit a progressive tax. That ignores the unequal impact of a sales tax which runs, on average as a percentage of income, from INFINITE on those unemployed and not receiving unemployment benefits (72% of the unemployed nationally and in WA) to about 15% for low-income workers and less than 2% for Washington's top tier of income recipients. This state also has a revenue tax on businesses. Most or all of the majors here find a way to legally conduct business elsewhere. Boeing, which moved its HQ to a state WITH an income tax, has been reported to routinely sign many or most of its contracts for new planes at 30,000 feet over international waters.
The Federal government had a revenue-sharing program until Ronald Reagan, who stopped it. However, he didn't stop Federal mandates on the states, so they had to come up with ways to provide those services without the money to accomplish them.
Yes. Nixon, if I recall correctly, started it, at least that particular program.
Good question. I live in Connecticut and the proximity to New York kept many people here. New York is still a real financial center. There are many people moving from California to Texas. Connecticut has been losing population for awhile but lately is holding its own and I think even gaining some. I don't want it to gain too much. I like it the way it is.
I’m all for taxing corporations and wealthy individuals more than is currently the case. But not until we can improve the subsequent allocation of those taxes. The federal government isn’t accountable to the voters for spending. Waste and misallocation is rampant. Billions leave the US monthly to corrupt entities.
I don't know why you posted this comment on Stephanie Kelton's blog, because any MMT'er knows that the "allocation" of all Federal taxes is to be deleted from the system. The Federal government isn't dependent on taxes for spending.
A more radical, and perhaps more marketable, agenda for those states would be this:
(1) Eliminate state corporate income taxes entirely. They are a zero-sum, full-employment program for tax lawyers and accountants and serve no useful purpose.
(2). Leave most earned income untaxed, except perhaps above a very high threshold: Maybe $1 million/year.
(3). Impose a steeply progressive tax on capital gains, with the tax rate tied to the length of time between purchase and sale of capital assets (so as to discourage high-frequency trading and encourage longer-term investment).
(4). Demand federalization of funding for public goods -- education, housing, health care, infrastructure -- that markets can't and won't provide equitably, thus eliminating the need for states to fund such programs using either highly regressives taxes -- on sales and fuel -- or property taxes (which, when relied upon to fund local public education only exacerbate inequality). Distribute these funds to states on a per capita, inflation-adjusted basis and let the states control how they are spent (subject to basic rules regarding, e.g ., non-discrimination and transparency), thus making state legislatures and governors -- not Congress -- the target of complaints about how the money is spent.
I'm gonna run for President on that platform in 2024. Does anyone want to form a campaign committee for me?
Ill help you with writing this up. Its potentially a good book. Bruce Dickson HealingToolbox atttg male #com
Makes a lot of sense. The federal government being monetarily sovereign could and should fund the states. State taxes are almost entirely redundant from the individual standpoint. They should have the right to tax bad actors of course, but why should I have to pay 9.9% additional city, county and state tax on everything I buy where I live? Couple your ideas on state and earned income taxes with my 3 policies of a 50% Discount/Rebate at retail sale, a 25-50% debt jubilee policy at point of loan signing and a $1000/mo. universal dividend from 18 until you get planted...and thats a platform that EVERYONE could root for...except finance of course, but they are few and we are many.
We should run as nominees of the Monetary Reality Party!
Of course, that would require creating a Monetary Reality Party . . . .
Or the New Monetary Paradigm Party. Or maybe the Make Systems Serve You Party.
In our technologically advanced society all a paradigm changing idea and its reflective policy program requires is a platform. That's why if you could get a Steve Keen, Stephanie Kelton, Randall Wray, Michael Hudson etc. to see its efficacy, and just get people to do the simple math of how it benefits them Hugo's famous saying: “Nothing else in the world…not all the armies…is so powerful as an idea whose time has come.” ...will carry you through.
I’m so glad you expanded the federalization funding programs...they’re more but education remains a critical strategic investment. Count me in on your campaign committee, not to form it but work the MMT strategy agenda.
Dr Kelton, is there any research on how to determine what “fair share“ of jurisdictional revenue any individual taxpayer should pay? I’ve seen arguments ranging from equity-focused increasingly progressive tax rates, to behavioral economics driving individuals to make tax-efficient decisions, but struggle to find an analytical framework that doesn’t devolve into envy vs greed.
I wish the federal gov't would sit down and have "THE TALK" with Americans. It might go something like this:
"Here in the U.S. we operate a capitalist economic system--whether you like it or not. And this system will allow a few enterprising individuals to make an awful lot of money. But here's the thing. Where do these magnificently successful people imagine their fortunes came from? Well, so far the US Treasury/Federal Reserve has spent about $31.5 trillion dollars into the world economy that we have decided (so far) not to claw back in taxes. So, in effect, the US gov't has proclaimed: 'Let our citizens (and the rest of the world) compete for these dollars, and after a period of time we'll see where things stand.' But be aware that we may want some--if not most-- of our money back.
In the game of Monopoly, the eventual winner doesn't get to keep the money--that would be ridiculous. It's returned to the "bank"--which actually works more like a Treasury, if you think about it. In the same way, we expect successful people to return their winnings to the Treasury (in the form of taxes) during and at the end of their very successful lives. But not all of it. It only seems fair that they be rewarded for their entrepreneurial expertise and vision. Anything up to about--oh, I don't know--a billion dollars seems like compensation enough. I mean, remember, it's the gov't's money, and we let these wealthy folks "play" with it. But now the game is over. So live out the rest of your days like royalty--and give the rest back."
MMT has shown us what the true source of our "financial wealth" is--the U.S. gov't's deficit spending! After all, where else could the US dollars in your savings account have come from? You don't have a "Benjamin Tree" in your backyard. As the great Randy Wray says: "Balances have to balance!" If the federal gov't runs a deficit, it means by force of logic that the private sector (and the rest of the world) must run an equal surplus. Stephanie has eloquently made the same point.
The wealthy should be proud (if they've done it legally and ethically) of the contributions they've made to society. But it's childish for them to think that they "deserve" to keep their total winnings that only exist due to the clever "game" established by the federal gov't.
Wally, love this. A good way to get it out there, if yo have the resources, is to hire two or more actors, stage a debate on a soundstage. GEt a director who can make it seems like a debae contest. use fake names and make it seems like these are live candidates for Nov. 2024 President. This approach will make your points EMOTIONALLY ACCESIBLE to teh general public. Release the video as widely as possible. Contact me if you wish writerly support Bruce Dickson HealingToolbox atttg male #com
You might like Jonathan Pie
Since money is speech in America, taxing the rich is necessary to prevent the damage that unconstrained plutocracy does to democracy.
Just saw that interview. Your views on tax vs MMT are totally contradictory. On the one hand, deficits worries are a myth and we can print money as needed. On the other hand, 'tax justice' requires ever higher tax rates and outright wealth confiscation.
Today we tax corporate profits and the dividends that are paid. We tax investor earned income and dividend & cap gain income. Some of that after-tax income is invested and the dividends & cap gains it generates are taxed again. Now you want wealth taxes on accumulated wealth. You want to eliminate the step up in basis at death and ostensibly still want to keep estate & inheritance taxes.
How many times should each dollar be taxed? If deficits don't matter, why do we need to tax anyone's income at all? What is 'just' about a tax code in which 50% of citizens pay zero federal income tax and 10% of earners pay 80% or more of all taxes?
Is our tax system one that's meant to raise federal revenue or is it supposed to be a system for social activism? Our current federal tax code is raising record revenue now - what is the problem? Many states have surpluses and reserve balances - why do they need more tax revenue?
You are confusing state financesa and budgets with the federal finance and budgets.
States absolutely have to tax to spend.
As to why the federal govt needs to tax, you are looking at it too simplistically- you need to read Kelton's book The Deficit Myth in which she explains the money creation-taxation loop quite well.
I read it almost three years ago. I predicted then the inflation that is now upon us. If states have surpluses and record tax revenues, they don't need more revenue. MMT is not modern or a theory. It will not work in the long run.
The rise in prices has been proved by several analysts to be caused by corporate price-gouging, not "inflation."
Where do you get your ideas?
Corporate price increases are only part of the issue. A minor point at that. Even with corporate price increases over the past year, corporate profits are already weakening. See the latest quarterly earnings reports for evidence.
Data is where my facts (not ideas) arise. The massive leap in M2 money supply was a guarantee of an inflation spike, it was not difficult to predict. If you want to study other economists who can help you better understand, start with Milton Friedman. Read Henry Hazlitt's 'Economics In One Lesson'. John Taylor at Stanford is also very good as as Brian Wesbury.
Let's attempt to make this a little easier for you comprehend! Why did the price of cars suddenly increase starting in 2020 and only now is beginning reseed?
"Demand pull" " inflation is when demand out strips supply, which "then" allows prices to be increased. In every case in US history where we have seen "demand pull" inflation it has come as a result of a disruption on the supply side (WW2 and COVID 19 primary examples). Over the last 30 years prior to the COVID 19 pandemic the only significant sources of inflation in the US has come has a result of abusive market pricing power (monopoly power) from industries like the pharmaceutical industry, education, housing, health care industry, big tech, and energy. How much time do you spend trolling them?
The other type of inflation we are dealing with today, and in the past, is "cost push" inflation coming from the fossil fuel cartel. How much time do you spend trolling them?
The next thing we need to acknowledge as being a source of current inflation over the last 3 years is a basic understanding of how capitalism works! Production is based on what is forecast to be sold. Changes in consumer consumption will temporarily create shortages till forecasts are determined to be worth retooling (temporary or permanent). Again, pricing power from demand exceeding supply. When the oranges freeze in Florida, which decrease's the supply and increases the cost consumers pay for oranges, is this because of the money supply or the reduced supply of oranges?
Do you remember the 2017 tax cut Trump job program that was going to create all that economic activity? Then all of that QE between the tax cuts and the pandemic attempting to increase inflation by allegedly according to orthodox economics increase the money supply. It didn't make one bit of difference on the feds attempt to reach fed target rates on inflation.
When you have a reduction of supply that designed to meet a given forecasted demand, ANY SPENDING has the potential to be inflationary. The whole "quantity theory of money" is a ridiculous model using ridiculous endogenous assumptions. The Weimar Republic fiction or "printing money causing inflation" has it backwards and is design to bamboozle the uninformed.
Some is supply disruption. The bulk of today's inflation is due to money stock growth. Read 'The Price of Time' by Chancellor. Many of the world's great historical financial busts were associated with low interest, abundant money, and the speculation that followed them.
PS - if inflation is purely due to corporate greed, where was inflation between 2000-2021? Corporate profits rose but inflation remained controlled. Can you explain how that happened?
Talk about contradiction. 2000-2019 there was no supply side disruptions. Just Trump trade tariffs that increased costs on imports. Did the corporation increase prices to increase profits or was it due to increased costs, or both? If its just due to the money supply that would price markups. How does an increased money supply increase costs on corporations? 22 to 25 million people lost their jobs in 2020, on top of that the CARES act was 6.2 trillion dollars which primary went to corporations. After the American rescue act was passed which focused on funding going to people with a high marginal propensity to consume corporation started increasing markups. Some of it was due to workers asking for higher wages and increased energy cost as a result of the Russian invasion of Ukraine. It's not that hard to explain.
Increased money supply raises demand. As more dollars chase the same amount of supply, prices rise. Go to a college town bar on homecoming weekend. Give every person walking in a couple hundred in free extra cash to spend. What's going to happen to the price of beer? The Fed began monetizing COVID federal spending in 2020. Inflation began then. By January 2021, prices in many basic commodities were up 20% to 70%. It's not complicated. Just a mess now.
"If deficits don't matter, why do we need to tax anyone's income at all?"
Because MMTers are still stuck in the old paradigm that says we have to worry about inflation. MMTers are right about money mechanics and you are wrong, make no mistake about that, but neither you nor them are looking at what a policy of a 50% Discount/Rebate policy at retail sale would do. It would end inflation forever. That would free us to run the kind of fiscal deficits to renew our infrastructure and confront climate change. It would also claw back the purchasing power everyone has lost over the last 50+ years due to inflation and shipping jobs overseas.
I've rebutted every misconception and every critique, here and elsewhere, that is simply the assertion of an orthodoxy that the new monetary paradigm destroys. Neither Stephanie not Steve Keen will answer my posts. I suspect that's because they don't actually have answers to my new paradigm's policy program...except in their own minds which again still have orthodoxies that the new paradigm destroys. I'm happy to be questioned by them. Bring it on. Lets see whether I'm a crack pot or the monetary version of Copernicus, Gallileo and Kepler all wrapped up in one.
The clock is ticking on our socio-economic and political instability and on climate change. It's time to "go long, go deep." And remember, to hold onto a good reform like MMT when a paradigm change is possible is an unethical act.
There are several reasons for taxing, and MMT describes what they are. And yes, some of those reasons are "for social activism." That's what a government is for: to protect the weak from the ruthless.
By asking if the tax system is "to raise Federal revenue," you're falling into the "taxes fund spending at the Federal level" trap.
This is old, gold-standard thinking.
Where in the Founding documents will we find the language saying governments job is to protect the weak from the ruthless? If MMT works, we never need to tax again. Just print money.
Its simply a matter of elementary ethics that government should protect the weak from the powerful. Conservatives and libertarians often forget that ELEMENTARY consideration. That's also how they can always manage to side with the powerful in the maintenace of their power.
The truth is both liberals and conservatives are mostly stuck in the obsessive dualism of thesis vs antithesis instead of seeking a genuine synthesis. And of course Finance loves the fact that both sides love yelling at each other instead of LOOKING for the synthesis of a paradigm change.
A genuine synthesis benefits EVERYONE and SOLVES problems. You have to decide whether you like solving problems more than arguing about them.
How about, "government of the people, by the people, for the people!" Is that not good enough for you? Is that not what you believe is the job of are government? Trolls like you only express the economic freedom to exploit anything and everything. You don't come to this site operating in good faith, outside of trolling debunked nonsense. Is this the "freedoms" we send soldiers to die for.
I wish Michigan could enact progressive taxation but unfortunately a flat rate income tax was written into out state constitution in 1961.
Does your state constitution have an amendment clause?
Yes but amendments are a heavy lift. It is rare for the legislature to enact one. For citizen driven initiatives wide support is needed.
MMT answers far more of the issues we see in the modern economy than does Keynesian theory.
If you read the book then you should understand it.
The point of progressive taxation is not necessarily 'more revenue" immediately though that could be an outcome. Gaining more revenue does allow states to weather downturns when revenue drops because otherwise they have to go into disruption of austerity measures. We have seen this in Michigan since the early 1990s as Republicans cut taxes and when a downturn hits, critical programs end up getting short funded.
What Keynesian are you talking about? Neoclassical or classical? The textbook written by Mitchell, Wray and Watts attributes the foundation Context of the textbook primarily to Keynes's "General Theory." In general it supports the theory shared by it's writers. You find just about any observation made by MMT somewhere in Keynes writings. The problem is, is that the real Keynes was purged from University economics classrooms. Example: I just finished a small book (paper) by Keynes written in 1940 called "How to Pay for the War." This was paper written to the UK from Keynes on how to control inflation at the outset of WW2 as production was being again shifted to war materials. Near the end of the book (paper) Keynes starts talking about the wealth accumulation by the private sector due to the large accumulation of government debt (spending) during the war. He makes the comment that it should not be just "entrepreneur" as in WW1 who acquires the wealth from the government deficits (net spending). The workforce needs to share in some of the accumulation of wealth by the private sector from government deficits (reason for not having wage controls). There it was right there by Keynes himself, government deficits = non- government surpluses. The very thing that shocks people (initially) the most about MMT wasn't even something Keynes took as being disputable.
Very interesting- thanks for the info
It's the "New Keynesians" that come down on the Neoclassical side of the flow chart. "Post Keynesians" are on the classical side of the flow chart more in line with MMT. Then there was Keynes himself. I do think your right that MMT is more current and is able to better answer today's world. Keynes understood fiat currencies. The UK started using fiat currency during WW1 for domestic use to save gold and silver for foreign exchange.
I remember Brownback's tax cuts in Kansas. We were sending rolls of toilet paper because Kansas "couldn't afford" them.
Right, I should have said that MMT nievely assumes effective investment of deficit spending regardless of the source. The federal government isn’t effectively investing the enormous debts being incurred today. So what you’ll have is more debt not benefiting those debt holders. Investment of any printed debt should be carefully invested with the approval of the citizens.