by MMT has not developed a coherent theory of how tax fulfils the withdrawal function to control inflation it has prescribed to it, hence the papers by me and me and Andrew Baker. Hence too why we are also planning to develop this, considerably. We are seeking to develop theory on how tax does simultaneously have this withdrawal function, which does not fund spending but is an explicit part of the overall funding cycle, whilst simultaneously having a strong function in delivering social, economic and fiscal policy.…Richard Murphy has a point here. According to MMT 101, taxes function as a major factor in controlling inflation, and this sometimes gets interpreted by unsophisticated MMT proponents as "taxes control inflation," which is an over-generalization. But there is more to it than
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MMT has not developed a coherent theory of how tax fulfils the withdrawal function to control inflation it has prescribed to it, hence the papers by me and me and Andrew Baker. Hence too why we are also planning to develop this, considerably. We are seeking to develop theory on how tax does simultaneously have this withdrawal function, which does not fund spending but is an explicit part of the overall funding cycle, whilst simultaneously having a strong function in delivering social, economic and fiscal policy.…
Richard Murphy has a point here. According to MMT 101, taxes function as a major factor in controlling inflation, and this sometimes gets interpreted by unsophisticated MMT proponents as "taxes control inflation," which is an over-generalization. But there is more to it than taxation. For example, the MMT JG is a key piece in inflation control and maintaining price stability.
Since the publication of The Deficit Myth, the debate has shifted, for the most part, from solvency to inflation. MMT is now getting the blame for the increased inflation that most are obsessing over.
A sequel to The Deficit Myth seems to be called for to address how MMT addresses growth, employment and price stability, the harmonizing of which is the "holy grail" of macroeconomics. Whereas most economists hold that only two factors in this trifecta can be balanced at the same time (thus NAIRU, for example), MMT holds that it is possible to address all of them simultaneously to maintain a dynamic equilibrium among these factors through efficient and effective us of the policy space that the present floating rate system affords currency sovereigns.Tax Research UK
MMT and tax: the reality is that there is much more to be done on this issue
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