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, e

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.