[trashtester]

That actually sounds closer to Austrian concepts of inflation than MMT. Reducing the money supply in itself doesn't affect consumer prices, if it only affects money that was not in circulation anyway.

In order to use taxes to counter inflation (when it is defined as increas in consumer prices), you need to tax those who would otherwise spend most of the money. The most efficient way is to tax the upper middle class.

[brvsft]

I save most of my money, but supposedly I was going to spend it anyway so actually it should be taxed? Infuriating take.

Edit: Forgot to mention the obvious, if this is how you feel, why isn't a higher sales tax on certain items ideal? People scoff at sales tax proposals because they'd target the poor, but sales taxes could be implemented progressively too. Tax new cars, smartphones, etc. More expensive items get a higher tax, reducing the impact on poorer people.

[trashtester]

I'm not arguing for or against higher taxes. Just stating what I see about facts about the relationship between taxes and inflation under MMT thinking. (And I'm not a fan of MMT, btw.)

Inflation happes when there's an imbalance between supply and demand. MMT argues for increasing deficit spending to fund all sorts of social programs. It also argues that the purpose of taxes is not to "balance the budget", but rather to tamper the inflation that tends to follow overspending.

The alternative (increasing interest rates) doesn't work properly under MMT, since treasury bonds cannot have a real interest rate, or the deficit spending would eventually break down. That means that under MMT, purchasing power of consumers must be pulled back using taxation of various sorts, which only works if you tax the consumers.

The problem with MMT (the way I see it) is that adjusting taxes to regulate inflation is probably an even more painful approach for most people than using the interest rate.

Anyway, the fact you need to tax the actual consumers to fund social programs remains the same, even in more traditional social democratic/keynsian approaches, even if they use the interest rate to regulate inflation.

If you look at northern Europe (where I live), taxes on the middle class are much higher than in the US. They're also higher for the poor, but with the increased social benefits, free healthcare, etc, it matters less for them.

Oh, btw, a lot of the taxes collected ARE, as you propose, collected as sales or luxery taxes, as well as employers taxes (hidden income taxes) Where I live, the direct income tax is "only" around 45%. However, the base sales tax is 25%. The employers tax (tax on employers for paying salaries, in other words a hidden income tax) is 25% (if you make more than $100k). For some items, such as cars, fuel, alcohol, tobacco, cosmetics, sugar/candy, etc, there are additional taxes, often well over 100% of the base cost.

All-in-all, I suppose, out of the salaray budget that my employer allocates to me, 75-80% ends up as taxes, somehow.

And I'm middle class, not rich and not poor. If the left in the US really wants to have a European style welfare state, this is about the level that allows for that.

If given the facts about this, I doubt many American's would want to switch. On the other hand, few people over here would want to switch in the other direction, too, since they're used to the taxes and the benefits they buy.