Richard Murphy’s recently published work on tax gaps, tax spillovers and their implications for modern monetary theory, to which we referred here when it was published in the Real World Economic Review in September 2019, has received a significant boost.
Prof Randy Wray, one of of the founders of modern monetary theory has said of the special edition in which the price was published “There is one good contribution made to MMT that doesn’t come from the inner circle of MMTers. This might be a first—at least, it is the first case I can recall. … So, this issue of RWER contains what I believe to be a first—an article that tries to fill a perceived gap. … Richard [Murphy] argues that “cash paid in tax is a residual figure arising from a plethora of decisions on tax bases, reliefs and allowances, as well as tax gaps that result from non-compliant taxpayer behavior”. Recognizing MMT’s argument (based on Ruml) that taxes are not really for revenue purposes, he argues for seeing “use of tax [instead] as a critical instrument in economic and social policy management”. I agree.
This is Coffers delivering new theoretical insights into a developing area of economic thought.