Everything else to do with taking money from people should use a different word. We have plenty in English derived jurisdictions - Levies, Duties, Revenues, Excise, Tariffs, Tolls or Fees.
The problem is overloading the word 'tax' - which tends to be a US phenomenon. If you levy wealth, or apply duties to fuel then the problem goes away, and it becomes clear when we are talking about political charges, and when we are talking about economic ones.
Even the most rabid small government believer will need to raise taxes to ensure there are sufficient people to run the judicial system and the political system during a private sector boom. Whether cigarettes should be legal and attract duty is an entirely different discussion.
Just referring to (what I called) “drains” as a “tax’ makes perfect sense in the context of aggregated macro models, where fiscal policy is summarised with G and T.
“Even the most rabid small government believer will need to raise taxes to ensure there are sufficient people to run the judicial system and the political system during a private sector boom.”
Great line! Been thinking along similar lines myself, you nailed it. Cheers!
1. How does the "source/sink" terminology you introduce above differ from the bathtub analogy that Stephanie Kelton and others use to describe currency injections and leakages (or drains)?
1) Should be the same thing. Source/sink is standard in some areas of applied math/physics.
2) He’s supposed to have an article coming that is not just complaining about his treatment on Twitter. The Twitter exchange involved way too many people, and a lot of it referred back to earlier discussions.
Those two tax mechanisms I call Driving the Denomination and Releasing the Resources in Chapter 9 of Modern Monetary Theory: Key Insights, Leading Thinkers (https://www.elgaronline.com/display/book/9781802208092/book-part-9781802208092-17.xml)
Everything else to do with taking money from people should use a different word. We have plenty in English derived jurisdictions - Levies, Duties, Revenues, Excise, Tariffs, Tolls or Fees.
The problem is overloading the word 'tax' - which tends to be a US phenomenon. If you levy wealth, or apply duties to fuel then the problem goes away, and it becomes clear when we are talking about political charges, and when we are talking about economic ones.
Even the most rabid small government believer will need to raise taxes to ensure there are sufficient people to run the judicial system and the political system during a private sector boom. Whether cigarettes should be legal and attract duty is an entirely different discussion.
Just referring to (what I called) “drains” as a “tax’ makes perfect sense in the context of aggregated macro models, where fiscal policy is summarised with G and T.
Hi Neil,
“Even the most rabid small government believer will need to raise taxes to ensure there are sufficient people to run the judicial system and the political system during a private sector boom.”
Great line! Been thinking along similar lines myself, you nailed it. Cheers!
1. How does the "source/sink" terminology you introduce above differ from the bathtub analogy that Stephanie Kelton and others use to describe currency injections and leakages (or drains)?
2. I read Richard Murphy's post at https://www.taxresearch.org.uk/Blog/2023/04/11/mmt-and-tax-an-issue-that-needs-to-be-addressed-again/, but I don't do Twitter and so I can't find what he originally posted there on MMT and tax, nor can I find what Mosler et al. tweeted in response. So I can't determine to what extent I agree with your critique of Murphy above. Suggestions?
1) Should be the same thing. Source/sink is standard in some areas of applied math/physics.
2) He’s supposed to have an article coming that is not just complaining about his treatment on Twitter. The Twitter exchange involved way too many people, and a lot of it referred back to earlier discussions.