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In addition to inflation control, if you accept the classic story that “we tax so we can spend” is wrong (for the US at least, perhaps also to some degree for o

In addition to inflation control, if you accept the classic story that “we tax so we can spend” is wrong (for the US at least, perhaps also to some degree for other currencies with monetary sovereignty) then I feel we need to consider that taxation and expenditure are tools of not just monetary but social policy. For instance, how does taxation play a role in keeping the most productive people in society producing, motivated, and feeling like they’re getting fairly rewarded, without them say checking out for “less challenging” work or making enough to retire early? I suspect at some level, consciously, intuitively, or perhaps just accidentally (and the US seems a bit exceptional here to e.g. Canada, UK, Australia, NZ) that housing policy is similarly supported by an idea that the productive middle class and upper working class are kept as active participants in society by some sort of debt-fuelled hedonic treadmill. From what I understand other sources of debt (student debt, new cars etc.) play a greater role in the US. This is of course in addition to and balanced against all other monetary sinks / rents, e.g. utility bills, literal house rent, health costs etc. And being a dynamic system, it’s hard to model outcomes, e.g. would cutting income taxes liberate workers to put a bit extra away and perhaps invest extra hours in overtime or a side gig, or would it just serve to give temporary wage pressure relief to companies who are already refusing to fairly pay workers while allowing easier wealth extraction by rent-seekers? I find it a bit interesting we aren’t having more discussions about employment vs capital taxation, especially now that we’re seeing both escalating (rich getting richer) and broadening (a wider class of “rich” getting richer) inequality. I suspect historically there was little awareness/interest in your extremely wealthy growing their portfolios, but it becomes a bit more interesting when there’s eg a lottery around “the bank of Mum and Dad” or simply which specific year you were born (relative to eg the GFC) fuelling extremely different outcomes for people with otherwise similar backgrounds, capability, class, and contributions to society.

JaimeThompson 5y ago
" the most productive people " How are you defining productive here?
- nopassrecover 5y ago
  Good question. Something like “produces the most highly valued outputs per hour of worked input” which should roughly correlate with wages with the assumption that if those inputs are easily interchanged then there will be more competition and the output value will fall. I’m sure there are good exceptions, but I’m not sure they’re material to the argument that taxation to some degree influences social mobility and participation. Perhaps I’m also considering situations in which there is a close link between labour and output, and where those outputs are deemed necessary for society (eg doctors, tradespeople), even where perhaps there may not be high productivity multipliers in the same ways there are at somewhere like Netflix. So in my mind I’m thinking what role is taxation playing to keep electricians, plumbers, doctors, and software developers working for as long as they can without retiring (ie maximising their consumer value without compromising their productive value). I’m trying to put aside a value judgement about what I feel taxation policy _should_ be doing around this subject, but broadly I feel there’s a modern lens of alienation here in which control of means of production is perhaps less important than control of means of consumption.

JaimeThompson 5y ago

" the most productive people " How are you defining productive here?

nopassrecover 5y ago
Good question. Something like “produces the most highly valued outputs per hour of worked input” which should roughly correlate with wages with the assumption that if those inputs are easily interchanged then there will be more competition and the output value will fall. I’m sure there are good exceptions, but I’m not sure they’re material to the argument that taxation to some degree influences social mobility and participation. Perhaps I’m also considering situations in which there is a close link between labour and output, and where those outputs are deemed necessary for society (eg doctors, tradespeople), even where perhaps there may not be high productivity multipliers in the same ways there are at somewhere like Netflix. So in my mind I’m thinking what role is taxation playing to keep electricians, plumbers, doctors, and software developers working for as long as they can without retiring (ie maximising their consumer value without compromising their productive value). I’m trying to put aside a value judgement about what I feel taxation policy _should_ be doing around this subject, but broadly I feel there’s a modern lens of alienation here in which control of means of production is perhaps less important than control of means of consumption.