this is an MMT view only in the sense they emphasize they support high taxes on the rich even though they argue it's not necessary for revenue purposes. 1/

i am not claiming taxes in general are not necessary to finance govt (to be fair, neither do MMT-ers!), but that this particular tax should not be understood as motivated by revenue generation but by its effect on private incentives. 2/

middle-class taxes finance government in the most straightforward way, they reduce purchasing power that would otherwise bid up the price of goods and services, enabling noninflationary government spending. 3/

but high marginal tax rates at high income should be understood like Manhattan's congestion taxes: the revenue is nice, but it's not primarily motivated to raise revenue or offset the inflationary effect of other government spending, but to alter the incentives and behavior of private actors. 4/

(i'm don't think MMT economists would disagree with any of this, btw!) /fin

yes, exactly. hypocrisy is better than actively justifying the evils you won't refrain from committing. 1/

wealthy people determine their own incomes. they decide whether the firm they own will pay dividends, they set the terms of their compensation package. of course when they'll be taxed the marginal dollar at 94% they keep their pay under that threshold. 2/

but that's exactly how high marginal tax rates *work*. the point is not to generate revenue. the point is to keep it out of very wealthy peoples' pockets. 3/

their apologists will argue it's the same difference, they still control the money if they've left it in their firm. if that's the case, why do they fight so hard against these rates? 4/

the shareholder-value revolutionaries of the 1970s advised firms payout to shareholders briskly and in quantity, so that the firm would always be indebted, hungry for new cashflow just to service their loans. 5/

retained earnings, they said, burned a hole in firms' pockets. managers would use the excess funds for nice facilities, less aggressive pricing, higher wages, prestige research labs, things that weren't "efficient" from shareholders' perspective. 6/

of course, all those "inefficiencies" are more valuable from a social perspective than payouts to already wealthy shareholders. 7/

leaving retained earnings in firms where they are contested for by workers, customers, vendors, prestige-seeking managers, internal researchers, and the broader community is how high marginal tax rates do the work we want them to do. /fin

here in the US, among my lib/leftie crowd, we spend a fair amount of time dwelling on the US’ hypocrisies, its sins against the liberal values it ostensibly promotes. 1/

yet when an illiberal movement assumes power in the US, it does not merely seek to turn American power to illiberal ends. it seeks to sabotage the roots of American power, to render the country impotent. 2/

that suggests to me, for all the United States’ sometimes miserable flaws, the enemies of liberal values, even when they dominate the apparatus of state, still perceive in the US an implacable threat. 3/

i take some hope in that. /fin