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A Tax That Could Help with Inflation
- metadat 4y agohttps://archive.ph/osuCs https://archive.ph/osuCs TL;DR: > Perhaps for every percentage point increase in unemployment above 5 percent, the tax rate would fall by three points, and for every percentage point increase in inflation above 3 percent, it would rise by four points. Other rules could apply for periods when unemployment and inflation moved together. The tax code would become responsive to the economy by default, rather than only through new acts of Congress.
- Wowfunhappy 4y agoI would add to your TLDR what is actually being taxed: > The way it works is simple: Instead of reporting your income to the I.R.S. and being taxed on that, you report your income minus your savings, and you’re taxed on that. That’s a consumption tax: Your taxable income is what you spend, not what you save. > I’m more interested in another feature of the progressive consumption tax: the ability to dial it up and down to respond to different economic conditions. In a time of recession, we could drop taxes on new spending [...] In times of inflation, we could raise taxes on new spending. The article argues this is better than adjusting the interest rat, because higher interest rates decrease demand and supply. To tame inflation, we need to decrease demand but increase supply.