In my recent piece at the Australian Independent Media Network, there was a section I was not able to put succinctly and thus left it out altogether. Joe Weisenthal from Bloomberg publishing as @TheStalwart on Twitter has managed to do what I was unable to do.
Joe Weisenthal writes:
When people think “x pays for y” what they think about is sales at a company (cash coming in) paying for employee wages (cash going out)
People love pointing out the math how if we taxed the rich more we could solve homelessness or some other societal ill. MMT points out we do not need higher taxes on the rich to get more homes. What we need is for Congress to allocate the money to spend on more homes, and we need the supply-side capacity to build those homes.
Ameliorating inequality by taxing the rich might be a social good, but strictly speaking, the government can do plenty more than it does even without a wealth tax or a change to the highest marginal rate on income.
If you point this out though – taxes don’t directly fund spending – you get accused of word games. The logic is that taxes diminish domestic demand for goods and services. This creates idle goods and services. Then when the government spends money, that money can be used to employ those idle goods and services. Ergo taxes *do* fund spending, in a kind of roundabout way.
Cash-in, cash-out is clearly not what’s described above
Joe Weisenthal did write all the above for Bloomberg but I have somewhat re-ordered it. I do not think it takes away from the context in any way.
Australians would agree that taxpayers’ money can’t be used endlessly to run the Australian economy,” the Prime Minister told reporters in central Queensland on Thursday.
The Prime Minister by using the “taxpayer money” frame, they were spreading, however unwittingly (perhaps dog-whistling), a racist, sexist, classist myth.
Although most of us pay taxes of some kind, every time we say “taxpayer money” we prolong the illusion that society depends on certain kinds of people so we can have nice things.
One quick exercise shows why. Picture a “taxpayer.” What does one look like? A homeless Aboriginal trans teen? A Sudanese immigrant day labourer waiting to get on at the local abattoir?? A young mother trying to cobble together enough income to feed her family, while languishing on the Centrelink disability backlog? Unlikely. Let’s be honest: We know what sort of people “taxpayers” are supposed to be, and they’re not the ones we should be casting as the aggrieved parties.
Calling public money “taxpayer money” implicitly affirms that taxation is theft: If the money is taxpayers’ by right, what business does the government have using it for healthcare, jobs, or clean water? If we’re looking out for “taxpayers” and not the public as a whole, we are favouring wealthier groups over poorer ones—white people over Black people, men over women, Australian-born people over immigrants, and so forth. We’re hiding how the economic order relies not merely on the sacrifices of “taxpayers,” but the contributions of debtors, tenants, workers, and countless other actors. We’re perpetuating the politics behind the 1970s and 1980s demonization of “dole bludgers,” and Pauline Hanson’s One Nation movement—faux-populism that suggests the great majority rely on the wealthy, rather than vice-versa.
Not only is the “taxpayer money” frame damaging, but it doesn’t reflect how public spending actually works. A household or a business may have to stash or borrow money before it can spend any, but we are users of the currency. The Australian government, which is the issuer of the currency, works differently: Parliament votes to spend “new money” on something, then theTreasury and the Reserve Bank credit the relevant bank accounts, and…that’s it.
The government has spent new money into existence. Later, Parliament may tax “old money” back out of existence, but it isn’t collecting money in order to spend it. It’s “offsetting” earlier spending. It may also “offset” spending in various other ways. Although Parliament taxes everyday people too heavily, calling public money “taxpayer money” makes as much sense as calling it “student debtor money” or “suspicious driver money.”
Look at a dollar bill, and you will see the signatures of its creators: not taxpayers, but the public officials who let the taxpayers hold it in the first place. Money doesn’t grow on rich people. We should heavily tax the billionaire class so we stop living in an oligarchy, but we don’t need private capital for public spending. The federal government doesn’t confiscate dollars and redistribute them. It uses its legal power to create and destroy them.
Margaret Thatcher’s mantra was backwards: There is no such thing as “taxpayer money,” only public money. Modern money is a creature of the public, and we should use it for public power. We are all the public, and we each deserve a clear, equal say in how our economy and society work, no matter how much we each pay in taxes. It’s time to claim our democratic rights.
There is more than enough housing for the homeless, food for the hungry, and medicine for the sick. There is enough low carbon-emission technology to transform our energy system, quit exacerbating the climate crisis, and hire unemployed people all in one fell swoop. And there is more than enough public money to manage it all.
Exposing hypocrisy may feel good, but it does little actual good. The people who primarily identify as “taxpayers” are Morrison, McCormack and the coalition’s base. Constantly repeating that their “taxpayer money” is being wasted only pressures them to violently defend their property, as the system encourages us to do under stress.
For over 40 years, Australian Laborhave chided the Liberal-National coalition for fiscal hypocrisy. What do they have to show for it? For over 40 years, the Coalition has controlled the conventional wisdom around budgets, successfully using the “taxpayer money” myth to force Labor to “starve the beast,” i.e., cut social spending to actually starve children, veterans, and many others.
When we reinforce the right wing’s racist, sexist, classist frames in an attempt to expose hypocrisy, we lose. If instead, we root our politics in what is good and bad, just and unjust, moral and immoral, we can win.