• merc@sh.itjust.works
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    1 year ago

    The MMT theory says that money is created by government spending and destroyed by taxation. When it comes to inflation, MMT says that to rein in inflation, you need to raise taxes (basically destroy money, so there’s less of it to go around). If people have to pay more to the government, they’ll have less to spend on goods and services. If there are fewer people trying to buy the same thing, the seller won’t have the opportunity to raise the price if they want it to sell.

    Apparently in Argentina only 7% of government revenue is from income taxes. The rest is VAT, other taxes on goods and services, (53% combined), property taxes, social security contributions and corporate taxes. So, reducing the 7% down to something much lower (2%, 1%)? might not be a massive deal since people will still have to pay the VAT, other taxes on goods and services, etc.

    https://www.oecd.org/tax/tax-policy/revenue-statistics-latin-america-and-caribbean-argentina.pdf

    But, it does sound like the opposite approach you should take if you want to calm down inflation.