Taxes serve a different purpose than funding government programs from "summary" of The Deficit Myth by Stephanie Kelton
Taxes play a crucial role in our economy, but not for the reasons most people think. The prevailing belief is that taxes are primarily collected to fund the government's spending. However, this is not the case. In reality, taxes serve a different purpose altogether. The purpose of taxes is not to raise revenue to fund government programs, but rather to drive the currency. Taxes create a demand for the currency by requiring individuals to pay their taxes in the government's money. This creates a need for people to earn that money in order to meet their tax obligations. In essence, taxes create a market for the currency and give it value. By understanding the true purpose of taxes, we can see that the government does not need to collect taxes in order to spend. In fact, the government can spend first and then collect taxes later. This is because the government is the issuer of the currency and can always create more money to meet its obligations. The idea that taxes fund government spending is a misconception that has led to unnecessary austerity measures and harmful budget cuts. When we realize that taxes serve a different purpose, we can start to reframe the way we think about government spending and the role of taxes in our economy. In summary, the concept that taxes serve a different purpose than funding government programs is a fundamental shift in our understanding of the role of taxes in the economy. By recognizing that taxes drive the currency rather than fund government spending, we can begin to rethink our approach to fiscal policy and create a more sustainable and equitable economy.
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