By L. Randall Wray
This is another instalment in the series on the MMT view of taxes. I’m back from China, participating in the annual Hyman P. Minsky Summer Seminar at the Levy Economics Institute. Yesterday my colleague, Mat Forstater, gave a talk on the job guarantee and “green jobs”. Along the way he made two particularly insightful comments on MMT and taxes that I’ll use to introduce this instalment.
First, he discussed the MMT view of “modern money”—that is to say, the money that has existed “for the past 4000 years, at least, as Keynes put it in his Treatise on Money. The money of account is chosen by the sovereign and used to denominate debts, prices, and other nominal values. It is the Dollar in the US.
By Fadhel Kaboub
I was recently asked to testify before the Ohio House of Representative’s Tax Reform Legislative Study Committee. I urged the committee to carefully consider the long-term negative consequences of the regressive tax policy for the State of Ohio and its residents. What follows is the gist of my testimony along with some of the data that I presented to the committee.
Working class families continue to suffer from real income growth stagnation since the 1980s despite a steady rise in productivity (Figure 1). However, in order to continue supporting the growth of the U.S. economy, household consumption (the engine of GDP growth in the U.S.) became increasingly dependent on access to credit (credit card debt, student loans, car loans, home equity lines of credit, subprime loans, reverse mortgage loans, etc.). That is why household debt as a percent of disposable income has peaked at almost 140% in 2007 (Figure 2). The proper response to this problem is an increase in disposable income rather than easier access to credit.