MMT deliberately excludes redistributive taxation

MMT does not currently advocate, nor demand taxation for redistribution of wealth for the purpose of addressing inequality. However, Wray would like to tax the wealthy until they are no longer rich, though this is not a formal part of MMT (Wray 2020). 3 The redistribution of wealth through taxation is a fundamental feature of the neoclassical theory (Samuelson 1956; Mas-Colell et al. 1995; Keen 2011), but such wealth redistribution is absent from MMT (Wray 2014a). Redistribution taxation is no longer practiced as much as it once was, particularly in the USA (FRED 2020d), and despite its foundational position in neoclassical theory, it is rarely mentioned in public discourse today. However, I think that adding redistribution taxation to the MMT system is probably a necessity to stabilize the economy (Weller 2010), and to accomplish political stability (Acemoglu – Robinson 2012). The former reason is that taxation for redistribution lowers Gini, and thus, stabilizes demand growth. While Weller and Rao’s argument is relative to the emerging economies, the same issues appear in the developed ones. Relative to politics, Acemoglu and Robinson’s work shows that the more unequal economic hierarchies produce political instability together with worse economic performance. Barring this kind of taxation, other careful work must be done to prevent rentier gaming of the economy, although Mosler’s concept of eliminating bond sales has a great deal of merit.