Surely we must pay more taxes!?

PoliticsNerd I have just had a very quick google and cannot see any link between the government paying 80% of people’s salaries for them to stay at home during the pandemic from created money and an increase in inflation.

If the government injects created money into the country via infrastructure projects, job creations in the public sector etc., more people will be employed.

More people in employment, more money is spent in shops, hospitality, travel etc., thereby creating more jobs.

All of these will be taxed (both salaries and the majority of spending via VAT) therefore the created money is returned from whence it came.

I appreciate that my explanation is simplistic, but that’s as much as I can muster at the moment (confined to barracks and spending far too much time in GN)

MaizieD

^I can't speak for anyone else, but I don't really want links to theory, or to answer abstract questions about where money comes from - I would prefer answers to more basic questions, such as why, when taxation is so unpopular, does every government of every stripe impose it on its voters if we could have all the things it supposedly doesn't pay for without it?^

The problem is, Doodledog that I am not linking you to theory, I am telling you a fact.

If you don't understand the fact of where the country' money comes from than you can't understand about taxation when taxation is of fundamental importance to not only the government's management of the economy but also is a means, if the government so wishes, of ensuring a fairer distribution of the country's wealth.

Any 'theory' concerns how the state manages the money, not where the money originates.

While you believe there is room for significant government spending without triggering inflation MaizieD, others see this as a risk, particularly if the increase in money supply is not matched by increase in production. Most - because there are always more at the centre than any extreme - believe the truth lies in balancing spending with economic output, ensuring inflation remains in check.

My concern would be how you use your belief, your unwavering conviction in MMT, in discussion. It becomes dogmatism when everyone wanting to discuss other economic views are told they are wrong; that your theory is the one and only truth.

Holding an opinion should allow us to adapt, question and discuss. If should allow us to be open to change. Absolute belief entails a rigid adherence to the theory regardless of new evidence or reconsideration. GN is surely a place for the discussion not dogma?

Economic Theory is just a way for the elite to justify their own existence. The simple reality is that if taxation does not equal public spending the government has to borrow more.

The only case for borrowing more is to improve the economic output - increase exports or reduce imports, the UK has done neither for decades.

I can't speak for anyone else, but I don't really want links to theory, or to answer abstract questions about where money comes from - I would prefer answers to more basic questions, such as why, when taxation is so unpopular, does every government of every stripe impose it on its voters if we could have all the things it supposedly doesn't pay for without it?

The problem is, Doodledog that I am not linking you to theory, I am telling you a fact.

If you don't understand the fact of where the country' money comes from than you can't understand about taxation when taxation is of fundamental importance to not only the government's management of the economy but also is a means, if the government so wishes, of ensuring a fairer distribution of the country's wealth.

Any 'theory' concerns how the state manages the money, not where the money originates.

I can't speak for anyone else, but I don't really want links to theory, or to answer abstract questions about where money comes from - I would prefer answers to more basic questions, such as why, when taxation is so unpopular, does every government of every stripe impose it on its voters if we could have all the things it supposedly doesn't pay for without it?

I understand that there isn't a 'public piggy bank' from which public services are paid, but tax is still a form of collective spending - whether that is on paying the heating bill on a public library in Hometown or on paying interest on loans that pay the bill via a circuitous route.

Either way, unless defence, education, the NHS etc are somehow free (in which case why do some countries not provide them?) then the cost of having them should be shared.

GrannyGravy13

I am politically opposite to MaizieD but I am in agreement when it comes to the economy.

Taxes do not fund spending.

The government cannot owe money to itself.

The economy of a country is nothing like the budget of a household.

It’s not about owing money to itself it’s about controlling the economy

Mollygo

Do share your knowledge about that MaizieD since you obviously already know and therefore need no explanation.

Of course I know where the nation's money comes from. I've posted the information many times over the past few years in the hope that a few people might take an interest.

I don't have time to go into detail yet again but I will later on...

In the meantime, GG13 knows 😂

Nothing like a household economy for sure, but it’s just like a business on a massive scale.

A business plans its expenditure some of that is capital already some it will borrow, but it can only do that if lenders are confident it will be repaid with whatever interest is applied. The profit a business makes repays the loan and interest and accumulates more capital so that the business can expand.

Government finances work in exactly the same way, taxation; is the income that provides public services and repays loans. The UK has not reduced its borrowings for many years, when a loan matures it has just been replaced with another, the current interest on the debt is around £100bn a year. A government can create money but that is limited by the confidence of other lenders and traders. They will increase interest rates or reduce the value of the currency (or both) if they don’t have confidence the finance plan is good, as Truss found out.

The BoE very wisely counts QE as borrowing so the money supply, 1/3 of which is QE, is transparent, the current policy is to keep supply tight to control inflation, there is no reason to think there will be much growth in the economy. Finance markets are content for now with the strict public spending plans we have, longer term we have a long way to go to improve the economy enough to relax spending.

There are only 2 ways to control borrowing more taxation or less spending

People are taxed to pay for things, including MP’s wages.

I understand that there are different perspectives when it comes to looking at economic theory.

I also understand that if tax paid for nothing there would not be rises and falls in its levels. Nobody wants to pay lots of tax, but we all want decent public services, defence, pensions etc. If we can have those without taxation, why are people taxed - even those on £13k a year?

I am politically opposite to MaizieD but I am in agreement when it comes to the economy.

Taxes do not fund spending.

The government cannot owe money to itself.

The economy of a country is nothing like the budget of a household.

Do share your knowledge about that MaizieD since you obviously already know and therefore need no explanation.

Mollygo

Well put David49. Any government has a vested interest in taxes. Where else do their wages come from?

Do please explain where the money in circulation in the economy which is used to buy and sell and pay wages and get stashed away in tax havens etc. actually gets there. Does it just grow on trees? Does everyone have a little printing press in the garden shed?

In view of the fact that the economy is one of the most important social and political factors in the way a country is run I do think that knowing where the money comes from is a pretty useful bit of information.

mum2three

A lot of money is wasted, and this is where any change has to be made.
Each household in this country has a set income and we have to budget around that. The government should do the same instead of seeing the public as a source of new income.

I'm afraid ordinary folks have always been regarded as a never-ending income source by 'Our Betters'.
Example from history: Bad King John, among all his other sins, taxed his subjects over and over again until his own nobles decided that enough was enough and forced him to sign Magna Carta.

But the practice still goes on - what on earth will the powers-that-be try to tax next?

Completely wrong, as usual, David.

Well put David49. Any government has a vested interest in taxes. Where else do their wages come from?

MaizieD

Doodledog

Where do you think money comes from, mum2three?

And round and round we go 😂

I don’t expect any response

Money comes from those who are productive and give more back than they consume, paying taxes along the way.
If that isnt enough the government borrows/creates more to fill the gap

Doodledog

*Where do you think money comes from, mum2three?*

And round and round we go 😂

I don’t expect any response

Where do you think money comes from, mum2three?

And round and round we go 😂

mum2three

A lot of money is wasted, and this is where any change has to be made.
Each household in this country has a set income and we have to budget around that. The government should do the same instead of seeing the public as a source of new income.

...instead of seeing the public as a source of new income

Where do you think money comes from, mum2three?

mum2three

A lot of money is wasted, and this is where any change has to be made.
Each household in this country has a set income and we have to budget around that. The government should do the same instead of seeing the public as a source of new income.

People will never agree on what is ‘wasteful’ though. That is true in a household budget and in government spending.

A lot of money is wasted, and this is where any change has to be made.
Each household in this country has a set income and we have to budget around that. The government should do the same instead of seeing the public as a source of new income.

I bought a dog bed for my son’s puppy from a website that made great play of saying how it had started as a family concern in Leeds. It took ages to arrive, and the tracking showed that whilst the registered address of the company is indeed in Leeds, the bed was shipped from China.

Maybe we need a law to insist that all imports have to have easily accessible indicators (luminous stickers or something?) to show their country of origin? That way people could make informed choices.

Barleyfields

That’s undoubtedly true of some David, but not of those of us who try very hard not to buy Chinese products.

Sadly we cannot absolve ourself of this, no matter how much we try to avoid buying items made in China.

Chinese manufactured products are in our lives whether we know or not. When I replaced my dishwasher DH insisted I had a Samsung because he has working knowledge of the quality of Korean engineering. When the repair man came round last week, I emntioned this to him. He looked at the small plate fixed to the side of the door, full of codes and numbers and informed me that my 'Korean' dishwasher had in fat been made in China.

If not directly I am sure the food you buy at the supermarket will have been grown on a farm where farm machinery contains, at best Chinese parts, and may be made in China, the same in cars and buses your ride in, medical equipment in your surgery, and the sewing machines used by workers in Vietname, Bangladesh or Cambodia, or anywhere else foor that matter, to make your clothes

David49 is right. We live very privileged lives at others expense. and there is very little we can do about it.

That’s undoubtedly true of some David, but not of those of us who try very hard not to buy Chinese products.