Friday, February 15, 2019

Dean Baker — MMT and Taxing the Rich

Dean Baker looks at offsets.

He doesn't see "taxing the rich" as a good offset. I don't think MMT economists do either, and as far as I know, they have not pushed this proposal.

"Taxing the rich" through progressive taxation has another reason. That is, limiting the political power of wealth and reducing inequality. There are good reasons for this – social, political and economic.

Some MMT economists have recommend preemption of rent extraction first, with the residual to be addressed by taxation.

Beat the Press
MMT and Taxing the Rich
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C


Kaivey said...

If they were taxed heavily they would still have the best in society as the price of everything would fall. Their yachts and jets might get smaller, but they would still be the richest people in society living in their mansions and stately homes. I don't think it would made a lot of difference to them except it would cut their political power and make society more equal, which would be a good thing.

Society has a problem, what if the multibillionaires become trillianaires eventually? It's got to stop somewhere, so might as well nip it in the bud now.

Unknown said...

Taxing the rich has to be partnered with getting rid of the corporate income tax which in turn is coupled with a stipulation that at least 50% of quarterly income from corporations (S and C) be distributed as dividends which are reported to the IRS, and taxed as ordinary income, and no stock buybacks from accumulated cash assets of the corporation. Further a 2% per year tax on assets owned by the corporation (analog of Warren's Wealth tax for corporations)

Noah Way said...

The tax code is so unjust and riddled with loopholes and favoritism that it needs to be abandoned entirely. Taxation needs to be implemented on a humane value basis, penalizing behaviors that are detrimental to society (such as accumulating wealth) and rewarding those that are beneficial.

Clint Ballinger said...

Yeah, as someone wrote, you should be able to "win" capitalism w a max score, and then keep playing but earn no more points. The public provides the tax credit and the bond tokens, we should be allowed to put a max limit on the hoarding of them.
Tom, can you give reference for the "preemption of rents" stuff you mention?

AXEC / E.K-H said...

Clint Ballinger

Taxing the rich is contrary to the MMT agenda. According to the macroeconomic Profit Law Q=(G−T), MMT’s deficit-spending/money-creation feeds the Oligarchy permanently with profit and therefore it makes absolutely NO sense to afterward tax it away.

Perhaps the MMT salespeople still believe that MMT is for the benefit of WeThePeople. Fact is that MMT is a wellness program for the Oligarchy. Everyone can check how MMTers consistently argued against taxing the rich before the Green New Deal propaganda hit the headlines.#1

The philosopher Tom Hickey has quickly adapted to the new situation and comes forward with a new version of Hegel’s cunning of reason: “‘Taxing the rich’ through progressive taxation has another reason. That is, limiting the political power of wealth and reducing inequality.”

Question to MMTers: Why not simply stop deficit-spending/money-creation, the very producer of political power, financial wealth, and inequality?

Egmont Kakarot-Handtke

#1 MMT: Distribution is the drawback NOT Inflation

Noah Way said...

Don't feed the troll.

Bob Roddis said...

WTF does "preemption of rent extraction" mean exactly?

How will you be punished if you "extract rent"? Does a SWAT team come out and drag you away?

Andrew Anderson said...

Some MMT economists have recommend preemption of rent extraction first, ... Tom Hickey

Currently, with our Gold Standard relic banking model, "Bank loans create bank deposits" with interest as the rent charged for the loans. Thus a large portion (around 40%?) of a nation's money supply is rented from private banks and with the potential of boom-bust cycles too as the money supply expands and shrinks.

But why should this be when inexpensive fiat and a Citizen's Dividend allow a "loanable fiat" banking model and low interest rates where de-privileged banks would serve as mere loan brokers between fiat accounts at the Central Bank? And without boom-bust cycles since the fiat supply need never decrease?

with the residual to be addressed by taxation. Tom Hickey

Taxation would work much better with a "loanable fiat" banking model since private banks cannot create fiat. Otoh, with our current banking model, banks can replace taxed away deposits with new deposits ("Bank loans create bank deposits"). Not that this matters, I suppose, if price inflation control is not the object.

Andrew Anderson said...

WTF does "preemption of rent extraction" mean exactly? Bod Roddis

Given that land is a finite resource, it is reasonable to limit the amount one may own or at least provide that everyone has at least one shelter they need not rent from anyone else.

In ancient Israel, the land was roughly equally divided among all Hebrews and kept that way by laws (Leviticus 25) that prevented the permanent loss of a family's land.