MMT summary on monetary vs. fiscal policy: Modern Monetary Theory (MMT) prefers the central bank interest rate to be set permanently to zero, taxes are the way to tackle inflation caused by the additional money supply caused by additional government spending.
Long, long ago, Marx and the rest of the International Workingmen’s Association resolved that indirect taxation was anti-worker, and that direct taxation was the way to go; the former conceals from workers what they pay to the government! Unfortunately, both social-democratic and Soviet tax policies betrayed this profound realization, the former through VAT taxes, and the latter through turnover taxes. In Canada, look no further than the GST/HST, QST, and PSTs.
Likewise, central bank interest rates represent hidden, not-so-transparent costs to workers. Were that set to zero, and were all indirect taxation substituted with direct taxation, workers would know the full costs necessary to keep inflation down. Inflation costs would be transparent.
Furthermore, if there absolutely must be general taxation on consumption, as insisted upon by historic social-democratic and Soviet tax policies, the “progressive consumption tax” put forward by Bill Gates would be better than indirect taxation. In the Canadian context, the GST/HST, QST, and PSTs should be substituted entirely by this new tax proposal.
[I oppose this as a substitute for income taxes, but not for traditional consumption taxes. Also, other “progressive consumption tax” articles have been written by Ben Cardin, Robert Frank, and Laurence Kotlikoff.]
