Most people think tax pays for government spending. It doesn’t. In a modern monetary economy, governments that issue their own currency spend first and tax later.
In this video, I explain the six real purposes of tax:
- ratifying the currency
- controlling inflation
- redistributing income and wealth
- repricing harmful activity
- strengthening democracy
- organising the economy for public purpose
Understanding this changes everything about austerity, social security, inequality and public services.
If we want a politics of care instead of a politics of fear, we need an honest debate about tax.