4 ms·

How is a (effectively) tax rebate going to cause inflation? Nothing was created out of thin air, they took in more money than they needed in taxes and so they a

• deleted 4y ago
  [deleted]
• anon291 4y ago
  Because they're taking income from the rich and giving it to the poor. Poor people are more likely to spend. If instead they took the money and gave it to rich tax payers (which I imagine would be deeply unpopular), then this would likely reduce inflation as rich people typically would save it, and thus remove it from the consumer spending category.
  • sillystuff 4y ago
    I doubt it will have a measurable, let alone significant effect on inflation. The maximum a single person can receive is $350.
• ch4s3 4y ago
  In effect it increases the amount of money circulating in the economy, particularly in the parts of the economy where inflation is high e.g. groceries, rents, etc. Basically CA is taking money (via taxes) that would likely sit in some form of savings or equities and transferring it to people who will spend it. As a value neutral take, it simply moves cash into the economy and increases the velocity of money. If the production of goods and services can't keep up, there will be more inflation.
• ianferrel 4y ago
  Tax rebates cause inflation because they result in more money available to chase an unchanged quantity of goods and services, which causes prices to rise. Similarly, tax increases reduce inflation because after paying taxes, people have less money to buy things that are not taxes. Critically: inflation measures the cost of goods and services, and taxes are not a good or service.