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this post was submitted on 04 Nov 2023
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Well if you really want to get technical about it.... No programs or spending are really funded by taxes anyway, the government just says "OK" and the numbers in the bank accounts of the companies implementing said program go up. Taxes funding things is just a myth. Taxes just delete money. So technically, nothing is funded by taxes and taxes are just a money void.
Edit: People seem to be down voting because they think this is tinfoil hat BS or something. It's not. Look up modern monetary theory. Governments with fiat currency don't need to collect money to pay for things. They just invent and issue more currency. See this video: https://youtu.be/75udjh6hkOs?si=dVpp9V5f96kLDV4-&t=1628
the wikipedia page says:
i don’t think your comment properly highlights how controversial MMT is. i’m not an economist, but i don’t think it’s fair to use language like “taxes funding things is a myth” and “technically nothing is funded by taxes and taxes are just a money void”, when those claims rely on such a controversial theory.
It's not worth your time to refute one giving youtube link as a backing reference.
Yes this is all true, MMT is a theory. It's in the name. Yes, it's controversial.
But those points have nothing to do with the validity of the statements I made, including the ones you quote. It's a very broad economic theory covering how things should be done etc etc.
My point is not founded on MMT, I referred to it as a "look this stuff up by starting here". That's why it's only mentioned in the edit. The mere fact that this is an even remotely acceptable implies the statements I made is valid - otherwise MMT would fall apart at its seams.
Taxes funding things is indeed a myth, and they're essentially a money void. Go read up on those specifics if you want to get into it. The video I linked has a literal explanation of this like 30 seconds later. When congress approves programs, they just allocate new funds to it, and move on. There's no digging up taxes to point towards it.
You could begin making an argument it has implications for the validity and reliability of the sovereign currency, but it has no real relationship to taxes. That's just not how modern economics work anymore.
In other words... it upsets the rich people that got us into this mess.
I mean this is a cute clever thing that sounds smart that isn’t.
The government pays for things. The government funds that through monetary policy that includes printing money, as well as raising money via taxes. Whether the government deletes a dollar you give them and prints another dollar vs transferring the dollar you gave them into their spending budget is super irrelevant.
It’s functionally the same and either way, your tax dollar, whether “deleted” and replaced or transferred is still your proportional allocation of funding.
This is real “I am very smart” vibes.
Same could be said about your post. It's very "haha I have a gotcha" vibes.
Yes the government deletes money. And they also create money. That doesn't mean they do or have to do the same amount of each. They can and do create more than they delete. They're not funding programs and then making sure they delete the same amount in your taxes. That's not how modern economics work.
Of course not. But none of that changes the fact that your taxes, in part, pay for what the government spends money on.
For state taxes, where the states don’t control monetary policy, it’s even less true. But it’s not really true for the federal government either.
Everyone who is paid in USD or pays in USD, in addition to people who pay taxes, pay for whatever we spend money on in one way or another.
It’s not a gotcha. Nothing was got. It’s just an absurd thing on the face of it. That while technically correct (in the sense that dollars are fungible) your dollars given in taxes will make up a percentage of total dollars spent this year by the federal government, and thus, you are paying for whatever they are doing. Along with other people.
That has real sovcit vibes.
Not at all. Look up MMT. Modern monetary theory and economics are well beyond "spend taxes to fund programs". Governments that issue debts in their own made up currency don't need to "spend" money, they just give money to the programs they support.
So money goes in and gets deleted, and then they create money and they give it away?
When I think of it, I do the same thing every time I buy something.
The money in my bank account doesn't get transferred, the bank just deletes it on their servers and then they create money and give it to the store.
Yes, they both create and delete money. That doesn't mean that the two processes need to be equal or balanced.
Your purchases do, or someone is owed their portion of the transaction. That's not the case when the government is writing bonds or appropriating funding to programs. They can create money freely, regardless of the tax they collect. Taxes serve a different purpose.
That would increase inflation drastically, which is something governments absolutely don't want.
They want inflation to be around 1-2%. Less is no good, because rich idiots would just hoard money instead of investing it. More is also no good because saved money would just disappear quickly.
Tell that to Japan. One of the highest spenders. Still stuck in perpetual de flation for over 20 years at this point.
It's not that simple.
As far as I understand that's the definition of fungibility, right? Every dollar is interchangeable and identical?
So there's no functional difference between deleting $1 and creating $1 except semantics, compared to moving $1, as long as the total value doesn't change.
The government just deleting money and printing money to pay for whatever it wants suggests that those things aren't equal, which would be the problem if it were true.
That’s what causes inflation. When you print more than you delete, at a rate faster than total economic growth.
You are aware of the fact that central banks are usually independant institutions and whenever the government meddles with them, that countries currency gets fucked by the market?
Also in todays interconnected financial and real economy there is only so much control any government canexert iver its currency, because the currencies values is significantly determined by the exchange from imported and exported goods.
While both points are true, that still doesn't change whether taxes fund these programs.
Sure there are other complexities like "how much is too much? Can we just keep doing it forever?" but those questions have more to do with the labor force of said country and their exports, and almost nothing to do with their tax rates.
The central banks control the amount of money based on the tasks they were given for their operation. That does not relate directly to the way the government is spending or taking money.
It is simply not the governments taxes and spending that is making or deleting money. It is the system of how the private banks can borrow or deposit money at the central bank with a certain interest rate,that is making or deleting money.
And youll have noticed that it is not the central bank granting loans to the government but bonds being sold on the market for the government to take debt.
MMT is techbros just trying to say, "don't look behind the microvaluation curtain, it doesn't matter." But in the amounts that they're trading on, it absolutely does matter.
It's actually anarchocommunists mostly.