One of the more predictable outcomes of this election is that I am now running into analyses suggesting that tariffs are a growth-enhancing policy tool.
The purpose of tariffs is to encourage internal substitution. If the income level shifts of those involved in the substitution circulation are greater than the price rises, then those people win and those outside lose out. A simple transfer from those who consume imports to those who produce substitutes.
After all that is the justification for the EU common external tariff that apparently is marvellous.
A currency creating (fiat) government does not tax to spend it spends to tax.
The role of taxation is to maintain the value of the currency. Removing taxation results in the collapse of the currency and the economy.
Yes, it begs the question how best to tax, ie, drain government spending. There are very bad ideas like payroll deductions that remove spending before it even reaches bank accounts. Then just bad ideas like taxing income and spending from regular working people. Then pretty good ideas like taxing spending after it has circulated in the economy for a while, ie, taxing corporate profits. Of course, the absolutely worst idea is to let people divert their tax obligations into savings and pay them counter-cyclical interest for taking money out of the productive economy and putting it under the proverbial mattress - Treasuries.
I digress, but be very careful about taxation at the Federal level lest the temple collapses on top of you - and not because you have ‘run out of money’.
I wrote a book about MMT. I noted the complications in the text. A tariff is a tax that drains demand, and so can be a substitute for income taxes for the purposes of demand control at some unknown ratio. There is no need to go “back to basics.”
The purpose of tariffs is to encourage internal substitution. If the income level shifts of those involved in the substitution circulation are greater than the price rises, then those people win and those outside lose out. A simple transfer from those who consume imports to those who produce substitutes.
After all that is the justification for the EU common external tariff that apparently is marvellous.
My point is that it’s only going to accomplish something if people believe it is going to be held in place for more than a few months.
Oh dear, back to basics.
A currency creating (fiat) government does not tax to spend it spends to tax.
The role of taxation is to maintain the value of the currency. Removing taxation results in the collapse of the currency and the economy.
Yes, it begs the question how best to tax, ie, drain government spending. There are very bad ideas like payroll deductions that remove spending before it even reaches bank accounts. Then just bad ideas like taxing income and spending from regular working people. Then pretty good ideas like taxing spending after it has circulated in the economy for a while, ie, taxing corporate profits. Of course, the absolutely worst idea is to let people divert their tax obligations into savings and pay them counter-cyclical interest for taking money out of the productive economy and putting it under the proverbial mattress - Treasuries.
I digress, but be very careful about taxation at the Federal level lest the temple collapses on top of you - and not because you have ‘run out of money’.
I wrote a book about MMT. I noted the complications in the text. A tariff is a tax that drains demand, and so can be a substitute for income taxes for the purposes of demand control at some unknown ratio. There is no need to go “back to basics.”