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To Pay for Trump Tax Cuts, House GOP Floats Plan to Slash Benefits for the Poor and Working Class
(www.propublica.org)
this post was submitted on 02 Feb 2025
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politics
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So taxes exist just to make money disappear?
According to MMT, they serve to maintain currency demand.
All these elite tax cuts undermine the system described by MMT, however
Taxes primarily exist to create demand for the currency.
Let's say we're starting a new club with 100 members. We've got 5 big projects for this month, and we want to make sure all the members pitch in.
So we say: a month from now, everyone will turn in 10 "I helped!" stickers. If you don't, you're out of the club.
Then we hand out maybe 1500 "I helped!" stickers total to the leaders of the projects, to make sure there's enough to fill the demand for 1000 stickers since we know some will do more than others and end up with more than 10 stickers.
The leaders delegate the work out to other members, giving them stickers along with their assignments. Some members end up having scheduling conflicts, so they trade assignments between each other along with the corresponding bounty of stickers.
The month ends, everyone turns in their stickers, and we start all over again.
Notice a few things:
So taxes are important for giving people a reason to contribute and do something for each other, controlling inflation, and making sure wealth stays somewhat evenly distributed. But they're not a prerequisite for spending.
I think that while the relationship between tax revenue and spend can be fuzzy, there's only so far you can push printing the "I helped!" stickers without regard for the amount coming in before it all breaks down. Part of the value of those "I helped" stickers is knowing that the authority doesn't just print up a few quadrillion because they felt like it, and that the volume of incoming and outgoing "stickers" is at least somewhat in the ball park of comparable, and any deviation between the two at least be steady and predictable and thus subject for planning.
Yep. That was point three here:
Deficits still matter, they just don't matter in the same way that we usually see in the media when they talk about "revenue" and "spending taxpayer dollars".
Given that, I think the claim that there is zero need to offset spending would be pushing it too far. It might not be as simple as a naive interpretation and somewhat more flexible, but it still has a rather significant relationship that shouldn't be neglected.
Just print more money to pay for everything, hur dur, taxes are a scam!
Taxes are massively important. They're just not the source of the government's money, which... yeah, is... printed. It even says so on the bills.