by This should be fundamental in anyone's understanding of MMT. See Randy Wray, MMP BLOG #8: TAXES DRIVE MONEY. Taxes drive money. One of the most important powers claimed by sovereign government is the authority to levy and collect taxes (and other payments made to government including fees and fines). Tax obligations are levied in the national money of account—dollars in the US, Canada, and Australia, Yen in Japan, Yuan in China, and Pesos in Mexico. Further, the sovereign government also determines what can be delivered to satisfy the tax obligation. In all modern nations, it is the government’s own currency that is accepted in payment of taxes. A state must be able not only to levy taxes but also to collect them. That implies that, first, the state must be able to enforce its tax law
Topics:
Mike Norman considers the following as important: MMT
This could be interesting, too:
Mike Norman writes Jared Bernstein, total idiot. You have to see this to believe it.
Steve Roth writes MMT and the Wealth of Nations, Revisited
Matias Vernengo writes On central bank independence, and Brazilian monetary policy
Michael Hudson writes International Trade and MMT with Keen, Hudson
This should be fundamental in anyone's understanding of MMT. See Randy Wray, MMP BLOG #8: TAXES DRIVE MONEY.
Taxes drive money. One of the most important powers claimed by sovereign government is the authority to levy and collect taxes (and other payments made to government including fees and fines). Tax obligations are levied in the national money of account—dollars in the US, Canada, and Australia, Yen in Japan, Yuan in China, and Pesos in Mexico. Further, the sovereign government also determines what can be delivered to satisfy the tax obligation. In all modern nations, it is the government’s own currency that is accepted in payment of taxes.A state must be able not only to levy taxes but also to collect them. That implies that, first, the state must be able to enforce its tax law and, secondly, it must also do so. If it can't, or chooses not to, then that state is not fully sovereign in its currency. Similarly, the state must not only outlaw counterfeiting, and it must also enforce this ban effectively in order to have a currency monopoly (which is the basis of MMT according to Warren Mosler).
This brings in a considerable swath of tax policy and tax justice. For a state to be monetarily sovereign, it must have an adequate tax policy, be able to enforce it, and do so. This is fundamental to the "taxes drive money" principle.
Tax Research UK
Tax abuse, tax havens and Modern Monetary Theory
Richard Murphy | Professor of Practice in International Political Economy at City University, London; Director of Tax Research UK; non-executive director of Cambridge Econometrics, and a member of the Progressive Economy Forum