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Fortunately, when there's wage-driven inflation there's enough effective demand in the economy to produce enough supply to provide enough taxation headroom to o

• tastyfreeze 5y ago
  That is not how this works. First off prices increasing is the result of inflation not inflation itself. Inflation is an increase in money supply. Wages increasing is part of the process of inflation working its way through the economy. Increasing the number of dollars floating around does not give more tax headroom. Taxes are strictly a percentage of the quantity of dollars pie. Making the pie bigger means everybody gets a bigger piece and everything increases in cost to match. Wages that do not increase result in the earner getting a smaller piece of the pie. So, the cost of labor increases as people refuse to work for an amount that doesn't pay the bills anymore. But, the percentage of the slices are exactly the same after the lag period of 12-18 months. The lag period is how long it takes an increase in money supply(inflation) to be reflected in the markets of goods and labor. https://www.johnlocke.org/the-myth-of-wage-push-inflation/ https://www.johnlocke.org/the-myth-of-wage-push-inflation/ https://www.lancaster.ac.uk/staff/ecajt/inflation%20lags%20money%20supply.pdf https://www.lancaster.ac.uk/staff/ecajt/inflation%20lags%20m...