{"id":17164,"date":"2014-05-17T15:02:51","date_gmt":"2014-05-17T19:02:51","guid":{"rendered":"http:\/\/ssgreenberg.name\/PoliticsBlog\/?p=17164"},"modified":"2014-05-17T15:18:50","modified_gmt":"2014-05-17T19:18:50","slug":"randy-wray-what-are-taxes-for-the-mmt-approach","status":"publish","type":"post","link":"https:\/\/ssgreenberg.name\/PoliticsBlog\/2014\/05\/17\/randy-wray-what-are-taxes-for-the-mmt-approach\/","title":{"rendered":"Randy Wray: What are Taxes For? The MMT Approach"},"content":{"rendered":"

New Economic Perspectives<\/em> has the article Randy Wray: What are Taxes For? The MMT Approach<\/a>.<\/p>\n

But in the case of a government that issues its own sovereign currency without a promise to convert at a fixed value to gold or foreign currency (that is, the government \u201cfloats\u201d its currency), we need to think about the role of taxes in an entirely different way. Taxes are not needed to \u201cpay for\u201d government spending. Further, the logic is reversed: government must spend (or lend) the currency into the economy before taxpayers can pay taxes in the form of the currency. Spend first, tax later is the logical sequence.<\/p>\n

Some who hear this for the first time jump to the question: \u201cWell, why not just eliminate taxes altogether?\u201d There are several reasons. First\u2014as we said last time\u2013it is the tax that \u201cdrives\u201d the currency. If we eliminated the tax, people probably would not immediately abandon use of the currency, but the main driver for its use would be gone.<\/p>\n

Further, the second reason to have taxes is to reduce aggregate demand.<\/p><\/blockquote>\n

I have read about this aspect of MMT before, but this is the first time I have read these details and this emphasis.\u00a0 It helps to hear it explained this way.\u00a0 It also helps to put up front what are not the implications of MMT that one might\u00a0 assume having heard only the first part.<\/p>\n

The part of needing to have taxes to reduce aggregate demand implies that MMT proponents do believe in keeping inflation under control by having enough taxes to reduce aggregate demand if that demand would become inflationary.\u00a0 So it is unfair to claim that MMT proposes to print all the money you want so much so that it would cause inflation.\u00a0 MMT wants you to have the correct understanding of the role of currency for a government that issues its own sovereign currency.\u00a0 It wants to free you of the idea that taxes need to be levied in order to fund federal<\/strong><\/span> government expenditures.<\/p>\n","protected":false},"excerpt":{"rendered":"

New Economic Perspectives has the article Randy Wray: What are Taxes For? The MMT Approach. But in the case of a government that issues its own sovereign currency without a promise to convert at a fixed value to gold or foreign currency (that is, the government \u201cfloats\u201d its currency), we need to think about the […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[166],"tags":[],"class_list":{"0":"post-17164","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-stevegsposts","7":"czr-hentry"},"_links":{"self":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/17164","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/comments?post=17164"}],"version-history":[{"count":3,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/17164\/revisions"}],"predecessor-version":[{"id":17167,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/17164\/revisions\/17167"}],"wp:attachment":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/media?parent=17164"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/categories?post=17164"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/tags?post=17164"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}